date: june 5, 2020 subject: land value capture policy study

DATE: June 5, 2020 SUBJECT: Land Value Capture Policy Study The Land Value Capture Policy Study, attached, was brought to the Joint Board and Mayors’ Council Finance Committee on March 12, 2020 and the full Mayors’ Council on May 28, 2020. This study of potential land value capture approaches for TransLink was requested by the Board and Mayors’ Council as part of broader research into a Funding Strategy for TransLink. Materials were developed with external stakeholders throughout Fall 2019 and Spring 2020, prior to the COVID-19 pandemic. The scope of the study was established in collaboration with Metro Vancouver staff and TransLink retained Coriolis Consulting to perform the study based on their expertise on land economics and urban planning. The study:

1) Quantifies the amount of land value uplift that can be created by transit infrastructure in this

region; and 2) Identifies the challenges and opportunities for TransLink to use land value to generate new

revenue for transit investments, increase walking, cycling, and transit ridership, and support transit-oriented affordable rental housing creation.

In the report, Coriolis recommends pursuing both direct participation in strategic land acquisition and urban development, and land-based taxes and charges (e.g. property transfer tax, benefitting area tax, community amenity contributions). Based on feedback from Mayors’ Council in Spring 2020, TransLink will also continue to evaluate a variable-rate Development Cost Charge (DCC). The potential for any of the Land Value Capture mechanisms to be implemented as a part of TransLink’s funding framework will require additional discussion based on the economic conditions of the region during the re-building phase following the pandemic. ATTACHMENT

• Land Value Capture Report by Coriolis Consulting Corp. & Wollenberg Munro Consulting Inc.

Evaluation of Land Value Capture and Urban

Development as Sources of Revenue for TransLink

February 2020

Prepared for:

TransLink

By:

EVALUATION OF LAND VALUE CAPTURE AND URBAN DEVELOPMENT AS SOURCES OF REVENUE FOR TRANSLINK

PAGE I

Table of Contents

1.0 Introduction ........................................................................................................... 1

1.1 Background ........................................................................................................................... 1

1.2 Terms ..................................................................................................................................... 1

1.3 TransLink’s Goals ................................................................................................................ 2

1.4 Study Participants ................................................................................................................ 4

1.5 Professional Disclaimer ....................................................................................................... 4

2.0 Foundations of Land Value Capture ................................................................... 5

2.1 Rationale ............................................................................................................................... 5

2.2 The Factors that Create Urban Land Value........................................................................ 5

2.2.1 Geography and Context ......................................................................................... 6

2.2.2 Local Zoning and Infrastructure ............................................................................. 7

2.2.3 Site Characteristics ................................................................................................ 7

2.3 The Role of Land Owners .................................................................................................... 8

2.4 Approaches Using Taxes, Charges, and Zoning ............................................................ 10

2.4.1 One-Time Taxes and Charges ............................................................................ 10

2.4.2 Recurring Taxes ................................................................................................... 10

2.5 Approaches Using Direct Participation in Strategic Land Acquisition and

Development ....................................................................................................................... 11

2.5.1 Strategic Land Acquisition and Disposition ......................................................... 11

2.5.2 Participation in Urban Development Projects ...................................................... 12

2.6 Other Approaches Not Considered in this Report .......................................................... 14

2.7 Advantages and Disadvantages of Land Value Capture ................................................ 15

2.7.1 Taxes ................................................................................................................... 15

2.7.2 Development Charges and Zoning ...................................................................... 17

2.7.3 Land Acquisition and Disposition ......................................................................... 17

3.0 Approaches Currently Applied in BC ................................................................ 18

3.1 Taxes, Development Charges, and Zoning ...................................................................... 18

3.1.1 Federal Government ............................................................................................ 18

3.1.2 Provincial Government ........................................................................................ 18

3.1.3 Metro Vancouver.................................................................................................. 20

3.1.4 Municipalities ....................................................................................................... 20

3.1.5 TransLink ............................................................................................................. 23


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3.1.6 Summary of Taxes, Charges, and Zoning Mechanisms Currently Used in BC .. 25

3.2 Strategic Acquisition and Development Approaches .................................................... 26

4.0 Examples of Approaches Used by Other Agencies Outside of BC ................ 28

4.1 Examples of Approaches to Support Transit Investment .............................................. 28

4.1.1 Canada ................................................................................................................ 28

4.1.2 USA ...................................................................................................................... 29

4.1.3 Outside North America ........................................................................................ 29

4.2 Examples of Approaches to Support Affordable Housing ............................................. 31

4.3 General Observations ........................................................................................................ 31

5.0 Transit Investment, Rezoning, and Land Value ............................................... 33

5.1 Transit Investment and Densification .............................................................................. 33

5.2 Transit Investment and Price/Rent Premiums ................................................................. 34

5.2.1 Sales Price Premium for Multi-Family Strata Residential Units ........................... 34

5.2.2 Lease Rate Premium for Commercial Space ...................................................... 35

5.2.3 Residential Rents ................................................................................................. 37

5.2.4 Implications for Case Studies .............................................................................. 37

5.3 Transit Investment and Rezoning: Case Studies ............................................................ 37

5.3.1 Summary of the Multi-Family Residential Case Studies...................................... 38

5.3.2 Summary of Commercial Case Studies ............................................................... 39

5.4 Conclusions ........................................................................................................................ 39

6.0 Impacts of Different Approaches ...................................................................... 41

6.1 Impacts on Land Owners, Tenants, and Developers ...................................................... 41

6.1.1 Property Taxes (General, Surcharge, Benefitting Area) ...................................... 41

6.1.2 Development Charges ......................................................................................... 43

6.1.3 Density Bonusing and CACs ............................................................................... 43

6.1.4 Land Acquisition and Disposition ......................................................................... 44

6.1.5 Development ........................................................................................................ 44

6.1.6 Summary of Impacts ............................................................................................ 44

6.2 Impacts on Other Levels of Government ......................................................................... 45

7.0 Stakeholder Perspectives .................................................................................. 47

7.1 Summary of Stakeholder Perspectives ............................................................................ 47

7.2 Response to Stakeholder Input ........................................................................................ 49

8.0 Possible Directions for TransLink ..................................................................... 51

8.1 Aligning Approaches and Objectives ............................................................................... 51


PAGE III

8.2 Evaluating the Options and Identifying Those to Consider Further in the Near Term52

8.2.1 Capital Gains Tax ................................................................................................ 52

8.2.2 Foreign Purchaser Tax ........................................................................................ 53

8.2.3 Property Transfer Tax .......................................................................................... 53

8.2.4 Revisions to TransLink DCC Framework ............................................................ 53

8.2.5 CAC and Density Bonus Revenue Sharing ......................................................... 54

8.2.6 Across-the-Board Increase in Property Taxes ..................................................... 54

8.2.7 Land Value Tax .................................................................................................... 54

8.2.8 Benefitting Area Tax ............................................................................................ 55

8.2.9 Strategic Land Acquisition and Disposition ......................................................... 56


8.3 Examining the Approaches with Potential in More Detail .............................................. 57




8.3.4 Strategic Acquisition and Disposition of Land ..................................................... 64


8.4 Potential Uses of New Revenue ........................................................................................ 67

8.5 Policy Questions to be Addressed ................................................................................... 68




8.5.4 Strategic Acquisition and Disposition of Land ..................................................... 69


9.0 Recommendations .............................................................................................. 70

Appendix 1: Case Studies ............................................................................................ 72

A.1 Approach ............................................................................................................................. 73

A.2 Identification of Case Studies ........................................................................................... 73

A.2.1 Multi-Family Residential Case Studies ................................................................ 73

A.2.2 Commercial Case Studies ................................................................................... 74

A.2.3 Summary List of Case Studies ............................................................................ 74

A.3 Data Sources ....................................................................................................................... 74

A.4 Detailed Descriptions of Case Studies ............................................................................. 75

Case Study #1: Strata Multi-family Residential Redevelopment in the Broadway Corridor . 75


PAGE IV

Case Study #2: Market Rental Multi-family Residential Redevelopment in the Broadway

Corridor ................................................................................................................ 77

Case Study #3: Strata Multi-family Residential Redevelopment in Burquitlam .................... 79

Case Study #4: Strata Multi-family Residential Redevelopment in Fleetwood .................... 80

Case Study #5: Strata Multi-family Residential Redevelopment in Lynn Creek .................. 82

Case Study #6: Commercial Redevelopment in the Broadway Corridor ............................. 83

Case Study #7: Commercial Redevelopment in Surrey City Centre .................................... 85

A.4 Summary of Case Studies and Implications for TransLink ........................................... 87

A.5 Attachments (Pro Formas) ................................................................................................ 88


PAGE 1

1.0 Introduction

1.1 Background

TransLink funds its share of the capital and operating cost of the regional transit system using a variety of

revenue sources, including transit fares, property tax, fuel tax, parking tax, and the new regional transportation

DCC that came into effect in January 2020.

The region needs more investment in transit infrastructure, requiring additional funding. TransLink is

interested in exploring new sources of revenue that will be sustainable in the long run and that have the

potential to advance regional policies. The new regional TransLink DCC that came into effect in January 2020

is an example of expanding the funding base, by obtaining revenue from new urban development projects.

This report examines the potential for TransLink to generate revenue from two kinds of approaches that are

linked to the increasing value of land and the continuing strong demand for residential and commercial

development in this region:

• One approach is called Land Value Capture, which is a broad term that refers to ways to obtain public

revenue or benefits from growth in the value of urban land. The rationale for land value capture is that

public investment in community building and infrastructure is a key driver of land value growth, so it is

reasonable to capture some of the growth in value to pay for the infrastructure.

• The second approach is a greater role in urban development activity by TransLink. TransLink has lands

that are no longer needed for transportation purposes and lands that could accommodate development

on top of or beside transit infrastructure, and it is acquiring land for future transit investment in places

where there will be future development opportunities. By being more active in urban development,

TransLink could create a new stream of revenues.

TransLink commissioned Coriolis Consulting Corp. and Wollenberg Munro Consulting Inc. to analyze the

potential to generate revenue using these two approaches.

1.2 Terms

1. “Land Value Capture” means any mechanism whereby a public entity obtains benefits or revenue

derived from land value or increases in land value. There is a wide range of land value capture

approaches which can be divided into two groups:

a) One-time forms of capture. These are methods of land value capture that occur at a particular event,

such as the sale of a property, development approval, or rezoning. “One-time” does not mean only

once in the history of a property, but once per major event or transaction.

b) Recurring forms of capture. These are methods of land value capture that are ongoing (usually

annually) and are not linked to specific events or transactions. This group includes property taxes.

2. “Urban Development” means direct participation in the urban land market and in the creation of new

residential or commercial projects. There are three main ways in which TransLink could be involved in

urban development:

a) Disposition of surplus lands. TransLink has property that was acquired in the past but is no longer

needed for transportation purposes. This includes entire sites, portions of sites, or the air rights above

transit facilities. These lands could be made available to the market for urban development. Prior to

the disposition of such lands, TransLink has the opportunity to capture value associated with


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rezoning. Disposition of sites or air rights is a form of land value capture, as it takes advantage of

market-wide gains in land value that have occurred since acquisition and benefits from any land value

increases that result from transit investment and upzoning. This differs from other forms of land value

capture in that it only applies to property that is owned by TransLink rather than to all properties in

an area subject to a tax or development charge.

b) Strategic acquisition and subsequent disposition of lands. TransLink acquires property for

transportation construction. In some cases (such as new transit stations) there can be opportunities

to acquire more land than the minimum needed for construction, in order to take advantage of the

new accessibility that will be provided by transit service and to ensure that the post-construction

development sites are optimized in terms of size and configuration. In these cases, TransLink can

benefit from land value gains due to accessibility, rezoning, and market uplift between the time of

acquisition and disposition (which usually will span several years). Strategic acquisition/disposition is

also a form of land value capture, benefitting from market-wide gains in land value and from transit

investment and upzoning. This approach involves more risk than the disposition of already-owned

surplus property, as it requires new capital investment in property and it usually requires holding land

for several years.

c) Development. There may be cases in which TransLink can best meet its goals by participating in

development projects on its lands, rather than just marketing them to developers. While there is

additional risk involved in development, there is the potential to earn developer profit and the potential

to shape development projects to achieve regional goals such as supporting transit-oriented

affordable housing or enhancing the transit experience for riders. Participation in development

projects is the one approach considered in this report that is not technically a form of land value

capture. The gain in land value of owned property is land value capture, but the separate (albeit

related) decision to be an equity participant in a project is a business decision intended to earn a

profit (not to capture land value). We include development participation because TransLink is

interested in exploring this possible source of revenue and because any disposition of surplus

property carries with it the possibility to be involved in development on the property.

1.3 TransLink’s Goals

The main focus of this work is to identify possible new sources of revenue to pay for transit investment and

transit operations. Generating revenue is not the only reason to consider land value capture and involvement

in urban development, though.

The region has many land use-transportation integration priorities, as outlined in TransLink’s Regional

Transportation Strategy and Metro Vancouver’s Regional Growth Strategy. In particular, there is strong

evidence that affordable rental housing in transit-oriented locations is an excellent strategy for addressing

housing affordability, because transit-oriented housing can reduce household transportation cost, reduce

commuting time (which can be an important benefit to lower income households trying to improve their

circumstances), and reduce construction cost by reducing the need for costly underground parking.

Affordable, transit-oriented housing is also good for building public transit ridership, as lower income

households (and particularly renters) tend to be high transit users.

In addition to building ridership, facilitating urban development at transit stations provides the higher density,

proximity, physical infrastructure, and placemaking that support walking and cycling.


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Consistent with its mandate to advance the Regional Transportation Strategy and Regional Growth Strategy,

TransLink is looking to this study to help it understand opportunities and challenges for using land value

capture to support three regional goals:

1. Identify new sources of revenue for regional transportation purposes that can be applied to:

• New investment in transportation infrastructure.

• Repaying existing debt for past investments in infrastructure.

• Transit operating costs.

2. Support transit-oriented affordable rental housing. Metro Vancouver needs more affordable rental

housing, especially in transit-oriented locations because renters tend to be more likely to use transit and

they benefit from the reduced cost of living that transit offers over car ownership. Being involved in the

urban land market, either through the terms of sale/lease of TransLink surplus sites or direct participation

in development, gives TransLink the ability to facilitate the construction of more rental units. Consistent

with the Metro Vancouver Transit-Oriented Affordable Housing Study1, “transit-oriented affordable rental

housing” generally refers to housing with these characteristics:

a. Rental tenure.

b. Affordable to households with incomes in range of $35,000 to $60,000 per year (about 50% to 80%

of regional median household income). Household income below $35,000 is considered very low and

generally requires non-market, public sector subsidized housing solutions. Household income above

$60,000 is in the moderate range and is generally able to support market rent in some parts of the

region.

c. In proximity to rapid transit or the Frequent Transit Network, allowing access to employment with

reasonable commute times and without having to rely on owning a private vehicle.

The emphasis is on affordable, transit-oriented rental housing because households in this segment are

above-average users of transit, are not having their needs met by market rental housing, and are capable

of paying enough rent to make new construction financially viable without ongoing subsidy provided land

(or density) is available at little cost.

3. Increase walking, cycling, and transit use. Increasing the non-automobile number of trips requires

supportive infrastructure (e.g. bike lanes) and it requires that transit be well-integrated with adjacent

development so that it is convenient for pedestrians and cyclists. Being involved in urban development

creates the opportunity to directly influence the form and character of development so that it is transit

supportive.

Land value capture can also be used to achieve other goals. For example, land value capture can be a tool

for wealth distribution, for reducing land values or housing prices (usually as part of a broader strategy to

make housing more affordable), or for reducing investment in property solely for capital appreciation

purposes. This report for TransLink is not intended to consider ways to achieve these kinds of outcomes.

This report focuses on the possible use of land value capture and possible involvement in urban development

as mechanisms for achieving TransLink’s three primary goals listed above.

1 Coriolis Consulting Corp. and Wollenberg Munro Consulting Inc., “Reducing the Barrier to High Land Cost: Strategies for Facilitating More Affordable Rental Housing Construction in Metro Vancouver. Phase 2 of the Transit-Oriented Affordable Housing Study.” March 2019.


PAGE 4

1.4 Study Participants

TransLink established a staff Working Group to manage this project and provide direction to the consultants.

TransLink invited Metro Vancouver to participate on this team, particularly regarding ways in which TransLink

might use land value capture to support affordable rental housing at transit-oriented locations in the region.

Representatives of local government and the development industry participated in two rounds of workshops

to review the consultant team’s work and also provided written comments on the first draft of the report.

The consultant team completed all of the technical analysis and provided independent opinions and

recommendations, as contained in this final report. The opinions expressed in this report do not necessarily

reflect the opinions of TransLink, Metro Vancouver, or any of the stakeholders who provided input.

1.5 Professional Disclaimer

This document may contain estimates and forecasts of future growth and urban development prospects,

estimates of the financial performance of possible future urban development projects, opinions regarding the

likelihood of approval of development projects, and recommendations regarding development strategy or

municipal/regional policy. All such estimates, forecasts, opinions, and recommendations are based in part on

forecasts and assumptions regarding population change, economic growth, policy, market conditions,

development costs, and other variables. The assumptions, estimates, forecasts, opinions, and

recommendations are based on interpreting past trends, gauging current conditions, and making judgments

about the future. As with all judgments concerning future trends and events, however, there is uncertainty

and risk that conditions change or unanticipated circumstances occur such that actual events turn out

differently than as anticipated in this document, which is intended to be used as a reasonable indicator of

potential outcomes rather than as a precise prediction of future events.

Nothing contained in this report, express or implied, shall confer rights or remedies upon, or create any

contractual relationship with, or cause of action in favour of, any third party relying upon this document.

In no event shall Coriolis Consulting Corp. or Wollenberg Munro Consulting Inc. be liable to TransLink or any

third party for any indirect, incidental, special, or consequential damages whatsoever, including lost revenues

or profits.


PAGE 5

2.0 Foundations of Land Value Capture

2.1 Rationale

Land value capture is already in use, or is being considered, as a revenue-generating tool in many urban

regions around the world. There is extensive interest in this tool because there is a compelling case for the

public sector to capture some of the value that the public sector creates via community building and

infrastructure investment and then reinvest this value to create further public benefit.

The rationale for land value capture can be summarized in this way:

• The value of urban land is based heavily on how it can be used and its access to urban infrastructure.

• Increases in land value (as distinct from the value of improvements) are almost entirely due to public

actions, such as zoning, infrastructure investment, and the creation of the legal and economic framework

within which communities develop. The public sector should benefit from these actions rather than all of

the benefit accruing to private owners of land.

• Investment in land is not as productive for the economy as investments that create jobs and income, so

taxation policy should generally discourage passive land investment in favour of more active forms of

investment.

• In urban areas, land should be used to its maximum potential, not left vacant or under-used, so property

tax policy should encourage development.

• Land cannot move, so tax avoidance is not a concern.

It is important to note that “land value capture” makes a distinction between land value and total property

value. The value of each urban property is the sum of its land value and its improvements value.

Improvements mainly refers to buildings. Most users of urban land tend to “bundle” land and improvements,

in the sense that a person puts a value on their home, or a business is willing to pay a certain rent to occupy

space in a particular location. But it is possible to un-bundle the value into its land and improvements

components. Land value capture focuses on the land portion, because this is the part of property value that

is created mainly by public sector actions and this is the passive part of property investment that is

comparatively unproductive for the economy, whereas improvements value is created by private investment

in new construction which creates economically and socially useful space for housing and employment.

Land value capture perhaps sounds like a new form of taxation, but in BC property owners are already

exposed to several kinds of land value capture taxes and charges that go by other names. Property tax,

property transfer tax, and the new Provincial school tax surcharge are just some of the ways that many land

owners are taxed (on the value of land and improvements). Developers already deal with other forms of land

value capture, including Development Cost Charges and Community Amenity Contributions. So, the idea is

not new. The purpose of this report is to explore how TransLink might use land value capture to achieve its

goals.

2.2 The Factors that Create Urban Land Value

In order to understand the rationale for public sector land value capture, it is important to consider how urban

land value is created in the first place.


PAGE 6

The factors that determine land value can be divided into three broad categories:

1. Geography and context:

• An urban area’s natural geographical setting, climate, physical environment, and topography

determine the appeal of the area as a place to live, work, develop, and invest. These factors also

affect the amount of land that is physically suitable for urban use.

• The international, national, and provincial contexts create the overall market for urban land in a

region, by driving the demand for housing and employment space. Population growth, job growth,

low mortgage rates, the draw of our Provincial health care and school systems, and local and non-

local real estate investment interest are examples of contextual forces that contribute to property

demand, putting upward pressure on land value.

2. Local zoning and infrastructure:

• The supply of developable land is partly determined by geography, but local land use regulation

defines how land can be used, which has a huge impact on land value by establishing allowable uses

and densities.

• Local/regional infrastructure (including water and sewer systems, transportation networks, and

community facilities) creates the context within which urban development can occur.

3. Individual site characteristics:

• While the above factors create the contextual market for urban land, the unique qualities and

immediate surroundings of each site determine the site’s value in the market context.

• Site size, views, soil conditions, accessibility, and topography are just a few of the individual features

that make some sites more valuable than others.

These factors are examined in more detail below.

2.2.1 Geography and Context

Natural Setting and History

What we now call Metro Vancouver was one of the early major urban settlements in BC after European

colonists began to arrive in large numbers. As this region developed, it gained increasing prominence as a

gateway and major urban centre with a large concentration of employment, a convergence of road and rail

networks, a port, and a concentration of specialized services in health care, education, management, and the

professions. The region’s natural advantages (natural environment, gateway, climate, scenic quality) and in

more recent days its culturally diverse population and its placement in the international time zone system

have positioned it well for economic ties to Asia, the US, and Europe.

The region also has features which impose a hard constraint on land availability. The ocean, mountains, and

US border hem the region into a relatively small area.

This momentum of geography and history set the region on a long arc of strong demand and constrained

supply, causing long term growth in the value of land.

International Context

In the modern world, people, goods, companies, and capital are highly mobile. Global economic,

environmental, social, and political forces create the impetus for some people to want to live in or invest in

places other than where they currently live. This mobility affects many countries including Canada, which

welcomes newcomers and new investment that add to the demand for urban land in attractive locations.


PAGE 7

National Context

Canada as a nation state and a national economy has major competitive advantages that lead to the demand

for urban land, including:

• A framework of property rights and the rule of law.

• A comparatively safe, tolerant, and culturally diverse community structure.

• An extensive network of air, marine, rail, transit, and highway infrastructure.

• A system of immigration and offshore investment management.

• A strong central bank and national banking system.

This national context attracts and supports population growth, business growth, and local and non-local

investment, all of which contribute to growth in urban land value.

Provincial Context

The Province of BC is responsible for key elements of the context that supports land value growth, including:

• The health care system.

• K to 12 public education.

• Post-secondary education.

• Regional infrastructure including highways, bridges, and transit.

• Economic development initiatives that attract investment and companies.

This Provincial framework contributes to land value growth in many communities, although there are declines

in some due to challenges such as the reduction of output in the forestry sector. The effect of the Provincial

education and health care system is magnified in Metro Vancouver, as it has the largest concentration of

post-secondary institutions and specialized health care facilities and services.

The Province also has a significant influence on the supply of developable land in Metro Vancouver, via the

Agricultural Land Reserve which protects farmland but also has the effect of shrinking an already-constrained

supply of land for development for urban use.

2.2.2 Local Zoning and Infrastructure

Local governments and regional agencies also make a significant contribution to the forces that create and

increase land value. The planning and zoning framework governs land use, height, and density which affect

the value of land. Local government provides infrastructure and amenities, regional agencies provide the

water system (Metro Vancouver Water Department), sewer networks (GVS&DD), electricity (BC Hydro),

natural gas (FortisBC), and transportation/transit infrastructure (TransLink).

2.2.3 Site Characteristics

The national, provincial, and regional/local contexts create an overall market for urban land in Metro

Vancouver, driving demand for housing and employment space and delimiting the supply of land for

development. Within this regional market, site specific factors determine the market value of individual parcels

of land. These include:

• The specific zoning regulations that apply to each site.


PAGE 8

• Accessibility by road and transit for residential and commercial uses and by rail, sea, or air for many

industrial uses.

• Services and utilities to the site.

• Nearby amenities and services (e.g. schools, shopping, parks, recreation/community centres).

• Soil conditions and topography.

• Special features such as views or waterfront.

These features determine the value of land. Investments in improvements increase total property value but

do not change the value of the land.

2.3 The Role of Land Owners

In the breakdown of factors that drive land value, all of them can be considered contextual, inherent in the

site itself, or the result of actions by others (mostly local government) that directly benefit the parcel of land.

The land owner does not really have a direct ability to cause land value to rise. Certainly land owners can

invest in improvements, which increase the total value of the property, but this does not change the value of

the land. The land owner can seek rezoning, but local government makes this decision. Therefore, many

commentators treat land value gain as a sort of windfall for the owner: the owner benefits from public

decisions (such as rezoning, transit investment, nearby public amenities such as parks) without having

directly paid for them. However, the characterization of the land value gain as a pure windfall makes it sound

accidental, which is not entirely true:

• Land owners have usually made deliberate decisions about where and when to buy land for housing,

business use, development, or investment. They may not cause land value gain, but they make a choice

that presumably includes some thought about where there is an opportunity. An investment in land

involves taking risk, weighing options, and making choices. This is different than finding money on the

sidewalk. While land values have risen rapidly in Metro Vancouver during the last decade, there have

Urban Land Value

International, national, provincial context, and geography

Local zoning, infrastructure and facilities

Individual site characteristics


PAGE 9

been periods of decline or very low growth (e.g.

1981 to 1988, 1995 to 2002, 2008 to 2009, 2018

to 2019), indicating that there is risk.

• Owners of houses or residential strata units may

have made tradeoffs when they acquired their

homes. For example, suppose two households

each have a house purchase budget of

$1,000,000. One opts for a small, older home

near the region’s core so family members can

walk to work, school, or shopping. This purchase

involves $800,000 of land value and $200,000

of improvements. The other opts for a suburban

location because of a higher priority on larger,

newer space. This purchase involves $200,000

in land value and $800,000 in improvements,

and also means that this household drives more.

Now suppose land values in both cases rise by

25% over some period. The first household will

realize a higher land value gain and, if a land

value tax mechanism were in place, would pay

more tax. This may be perceived as inequitable

considering the tradeoff that was made at the

outset.

• Developers or land owners who seek rezoning

would receive a windfall if extra density is

available at no cost. But if they exchange cash or amenities to obtain increased density there is no land

value windfall as long as the amount they pay is commensurate with the value of the density.

The conversation about land value capture in Metro Vancouver is in part stimulated by the rapid rise in land

values over the last decade or so.

The trend in Metro Vancouver house prices from 2005 to 2018 as indicated by the Greater Vancouver Real

Estate Board’s MLS Home Price Index2 is summarized in Exhibit 1.

Exhibit 1: Average Annual % Increase in Metro Vancouver Housing Prices by Type of Property (2005 to 2018)

Average Annual Increase in Metro Vancouver

Single detached 8.7%

Strata apartment 9.1%

Source: MLS Home Price Index, Greater Vancouver Real Estate Board.

All owners of residential property in the region have seen significant percentage increases in the land value

component of the total value. The dollar value increases are much larger in some areas (such as the west

side of Vancouver) because values were higher to start with, but the percentage gains are high across the

region.

2 The index is based on the estimated annual change in the sales price of a benchmark property within each submarket.

An investment in land involves taking risk, weighing options, and making

choices. If land value goes up it's not the same as the lucky accident of finding money on the sidewalk.

Household "A" purchases $1 million modest older house on lot with

higher land value ($800,000 land; $200,000 improvements)

Household "B" purchases $1 million newer house on lot with lower land

value ($200,000 land; $800,000 improvements)

Land Value Capture impacts Household "A"more than

Household "B" because "A" has higher land value


PAGE 10

2.4 Approaches Using Taxes, Charges, and Zoning

This section summarizes the main forms of land value capture that involve taxes and charges applied to

urban areas. The approaches are divided into one-time and recurring methods.

2.4.1 One-Time Taxes and Charges

There are several commonly used ways to derive revenue from land value at a point in time, usually at a

transaction or at a development milestone. These include:

• Taxes on the transfer of property ownership at time of sale. These are sometimes called stamp taxes

and in BC are called Property Transfer Tax.

• Income tax or capital gains tax on the increase in property value when sold. Different jurisdictions

treat capital gains differently. In Canada most capital gains are taxed favourably compared to income and

gains on principal residences are exempt from taxation.

• Fees charged on new development at the time of permit approval, mainly to raise revenue to pay the

capital cost of community infrastructure. These are variously called development levies, impact fees, or

development charges. In BC, they are called DCCs or (in the City of Vancouver) DCLs.

• Public benefits in exchange for new development entitlements (density), usually at rezoning. Many

jurisdictions use density bonusing or negotiated contributions at the time of rezoning to obtain public

benefits or amenities. These are commonly called Community Amenity Contributions (CACs) or density

bonusing in BC.

There are some important features of these one-time approaches:

• Property transfer taxes are paid by the purchaser and do not require a cash outlay by the existing owner.

• Capital gains tax occurs when the owner sells, meaning the sales proceeds provide the cash used to pay

the tax.

• Fees paid at development approval are paid by developers as part of the process of creating a new

project and tend to come out of what otherwise would be land value.

• Public benefits at rezoning are an exchange of density, which creates new land value, for amenities and

infrastructure that use some of the new value to address the needs and impacts of growth.

2.4.2 Recurring Taxes

The second major group of land-based revenues consists of different kinds of ongoing taxes on property.

These include:

• Tax on Property Value or Land Value. Almost all jurisdictions levy annual tax on the value of land,

improvements, or (most commonly) both. The most common approach is for land and improvements to

be taxed at the same rate, although there are a few jurisdictions that allow different tax rates for land and

improvements.

• Property Tax Surcharge. Some jurisdictions apply a property tax surcharge to some categories of

property, such as property above a certain value or in a particular location. The BC School Tax surcharge

on high value residential property is an example of a value-based surcharge and the BC Speculation and

Vacancy Tax is an example of a surcharge on a particular group of properties based on location and

occupancy.


PAGE 11

• Benefitting Area Surcharge. Some jurisdictions apply a tax surcharge to properties that benefit from a

specific public sector capital project. These are sometimes called betterment taxes, special service area

taxes, local improvement taxes, or special assessment districts. Several jurisdictions in the US levy

additional property taxes on property in defined transit service areas.

These recurring charges are paid by the owners or users of the property out of their income or wealth, not

out of proceeds from disposition or development of the property. The taxpayer must have a source of income,

have cash on hand, or borrow to cover the cost of the tax, unless there is some system of exemption or

deferment.

2.5 Approaches Using Direct Participation in Strategic Land

Acquisition and Development

Land value capture mechanisms are intended to derive revenue from all urban property that benefits from

investments in infrastructure or from land use decisions. Land value capture by a public entity does not have

to be associated with any direct participation in the land market or in urban development projects. However,

direct participation in the urban land market, or in development projects, is another way that the public sector

can reap benefits from infrastructure investments and zoning changes.

2.5.1 Strategic Land Acquisition and Disposition

All levels of government are involved in acquiring and selling/leasing land for a wide range of purposes

including generating revenue, supporting housing, and meeting civic social, recreational, and cultural

objectives. Agencies involved in delivering transportation infrastructure are of necessity involved in the land

market because they require property for permanent use for stations and corridors as well as temporary use

during construction for staging and storage. This need for property creates an opportunity to take advantage

of subsequent gains in land value due to increased accessibility after a new line goes into service, changes

in zoning, and general growth in land value in an overall rising market.

Public agencies with long term involvement in transportation infrastructure delivery also end up with

properties that were needed in the past but are no longer needed for transportation purposes and so are

partly or entirely surplus. Depending on where they are and how long they have been held, the value of these

properties may be significantly higher than original acquisition cost.

Under the general heading of strategic land acquisition and disposition, there are several ways in which a

transportation agency can earn revenue or achieve other objectives such as encouraging transit ridership or

supporting affordable housing:

• Disposition of property that has become surplus to the agency’s functional transportation requirements.

Sites once needed for storing/maintaining transit vehicles or transfer stations may no longer be required

due to changes in technology, transportation networks, or other factors.

• Disposition of sites required for temporary use during major construction once construction is complete.

• When acquiring land for new infrastructure, acquisition of more than the bare minimum needed for transit

use. There are several ways to create these opportunities:

o The potential for air rights development over transit infrastructure can be maximized if care is taken

in acquiring sufficient land to create the physical ability for such development and if care is taken in

the siting and design of transit infrastructure.


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o If the land required for transit construction necessitates the acquisition of a part of a property, it can

be financially advantageous to acquire the entire property either to ensure that post construction

there is a workable development site or to avoid the situation that it costs more to acquire a partial

property (because of negative impacts on the residual portion) than to just buy the whole site.

o If the land required for transit construction is adjacent to property that is a strong candidate for land

assembly that creates additional, better development potential.

These opportunities create the potential to generate three kinds of land value gain:

• Usually considerable time passes between acquisition and subsequent disposition of surplus property. In

strong land markets, the growth in land value can exceed a public agency’s cost of capital meaning that

even if the funds to buy land must be borrowed the eventual sale will produce a net gain.

• The area around new transit stations is often a candidate for changes in land use and increases in density,

which usually add to land value. Even when much of the land value lift caused by rezoning is captured

by local government, in the form of development levies or mechanisms such as CACs, a portion of the

lift accrues to land owners.

• New transit infrastructure improves accessibility, which tends to add a price premium on residential and

commercial space in the vicinity of the transit. This price premium translates to increased land value for

the owner.

In many cases, land acquired by a transit agency can benefit from all three of these gains so it can become

very attractive to make early strategic investments in land when planning for major new infrastructure projects.

In addition to generating revenue, land acquisition also creates the potential to achieve other objectives.

When an agency disposes of developable land, via sale or lease, there is an opportunity to influence land

use and the form and character of development in ways that can support affordable housing or that support

transit ridership. Mechanisms to achieve objectives regarding affordable housing and transit ridership support

include:

• Terms of sale or lease of land to developers. TransLink could, for example, require the inclusion of

affordable rental housing units when it disposes of development sites and could require that the physical

design of projects be supportive of walking, cycling, and transit use.

• Zoning. When TransLink seeks rezoning of property prior to disposition it could work with local

governments to include zoning provisions regarding affordable rental housing or to require design

elements that are supportive of walking, cycling, and transit use.

• Funding. TransLink could apply some of the proceeds from strategic land acquisition/disposition to

investments in affordable housing (directly or by contributing to other initiatives such as the regional

affordable fund being proposed by Metro Vancouver as one of the outcomes of its Transit-Oriented

Affordable Housing work).

There are tradeoffs, of course, because incorporating rental housing results in less land value (unless local

government is willing to provide significantly more new density for rental than it would for strata). It is up to

the agency to decide which objectives to advance and how to prioritize different potential public benefits.

2.5.2 Participation in Urban Development Projects

If a transit agency sells or leases surplus lands to the development sector, the agency benefits from gains in

land value that have occurred since the time of acquisition, especially if new transit infrastructure has been

built in that time and if allowable land use and density have changed. A private developer who acquires the


PAGE 13

land then benefits from any land value growth between the time of site acquisition and the completion of the

project, and also (in a successful project) earns a developer profit.

By directly participating in development projects, a public agency can tap some or all of this revenue potential.

TransLink could be involved in urban development projects in various ways:

• Rather than sell or lease surplus sites or development parcels to developers, TransLink could take on

the role of developer either alone or in partnership with other developers.

• TransLink could be the developer of rentable space within or adjacent to new transit infrastructure (e.g.

retail space as part of the station or rentable space in the air rights above a station).

• TransLink could take ownership of space within a development project in lieu of being paid for a

development parcel. In this case, TransLink would not be a developer but would take on some

development risk by taking space instead of cash.

Direct participation in development projects is not technically a form of land value capture. The land value

capture is realized when a surplus property is made available for development, either to an arms-length

developer or to an internal development division. Participating in the actual development on the surplus

property would be a separate business decision by TransLink that involves injecting new equity and/or

deciding to invest the value of the land into the project in order to make a profit in addition to capturing the

(increased) value of the land. Of course, non-profit developers work on a different business model, but

presumably TransLink would only become directly involved in development projects as a means of generating

revenue (i.e. profit) to be applied to the organization’s investment objectives.

Direct participation in development is very different from land value capture as it involves significant possible

risk, including:

• Market risk. Large scale, high density development projects typically involve two or more years between

commencement and completion. During this time market conditions can change. If prices and the rate of

sale or lease-up increase, then developers benefit. But the market can go soft, reducing or eliminating

profit and creating the risk of loss.

• Cost risk. Developers use various methods to reduce risk of increasing construction cost, but there is

always exposure to delay, mistakes, material or labour issues, and other factors that can increase cost.

If costs rise more than sales prices, then profitability is impaired.

• Approvals risk. The process of obtaining municipal development approvals involves risk related to

municipal requirements (e.g. off-site works, sustainability features, design) and timing. Risk can be

significantly mitigated by resolving zoning-related matters before committing to a project but there are

still risks inherent in the development permit and building permit phase of a development project,

particularly for large projects and projects that involve any significant opposition from the public or specific

stakeholder groups.

• Financing risk. Almost all development projects require construction financing. Depending on the terms

of such financing, there is a risk that interest rates rise during construction.

• Physical risk. Development projects can encounter soil contamination, problematic geotechnical or

hydrological conditions, or damage during construction (e.g. fire, excavation collapse) that increase cost.

These can be mitigated by thorough due diligence work before committing to a project, but some risk

always remains.

• Partner risk. An agency may prefer to work with a developer partner rather than be fully responsible for

a project. This has the advantage of adding expertise to the team, spreading risk, and reducing the need


PAGE 14

for agency equity or borrowing, but it comes with a new set of risks associated with the legal and financial

structure of the deal. A partner may become insolvent, act outside the terms of agreements, cause

negative publicity, or do other things that impair the financial or reputational position of the public sector

partner. These risks can be mitigated by careful partner selection and robust legal agreements, but these

risks cannot be completely eliminated.

Because of the risks involved, the decision to participate directly in urban development projects requires

caution and considerable advance work to ensure that the potential benefits are significant enough to warrant

the risks. A transit agency can mitigate the risks of being involved in development by:

• Focusing on projects that are at transit locations. Market risk is lower in high demand locations.

• Focusing on projects that include high-demand product.

• Extensive due diligence, appropriate provision for contingency, and detailed risk assessment.

Direct participation in development can generate revenue to apply to transit, affordable housing, and other

objectives. In addition, direct participation in development would enable TransLink to create affordable rental

housing and to design projects to incorporate features that support walking, cycling, and transit use.

2.6 Other Approaches Not Considered in this Report

TransLink asked us about four other approaches, which are not considered in this report for the following

reasons:

1. Cash-in-Lieu of Off-Street Parking. Off-street parking is an expensive component of high density

residential and commercial construction. In transit-oriented locations, demand for parking is lower and

developers are usually interested in reducing municipal zoning requirements for off-street parking when

the cost saving is greater than any loss in revenue.

Reduced parking requirements can be implemented by changing zoning requirements, without requiring

any contribution from developers. Alternatively, there are systems in which a reduced parking

requirement can be obtained in exchange for a cash-in-lieu payment, with the funds applied to transit

investment.

This means of generating revenue is not considered in this report for these reasons:

• Development regulation in BC is completely the responsibility of local government and is not likely to

be restructured to give other agencies a role in defining zoning requirements such as parking.

• Cash-in-lieu of parking is a revenue generating tool but it is not a land value capture mechanism. If

the cash payment is equal to what the cost of parking would have been, there is no impact on

development economics so there is no transfer of land value (and developers are not likely to build

less parking if they have to pay for it anyway). If the cash payment is less than the cost of the parking,

this can actually put upward pressure on land value by reducing development cost.

2. Hotel and Short-Term Rental Tax. Some local governments impose taxes on specific uses. However,

these are not land value capture mechanisms so they are not considered in this report:

• Hotel taxes are based on room revenue, so they are a tax on revenue not on value. There may be

an indirect effect on the value of hotel properties by reducing net operating income, but this is not the

aim.

• Taxes or fees on short term rentals are a means of regulating the use, not taxing value.

3. Tax Increment Financing. Another approach that is often mentioned is called Tax Increment Financing

(TIF). TIF works like this:


PAGE 15

• A public agency with property tax authority borrows money (either as a loan or by issuing a bond) to

pay for some form of infrastructure that is expected to cause land values and property tax revenues

to rise.

• To provide security for the lender or bondholders, the agency pledges to apply growth in property tax

revenue in the benefitting area to repayment. This pledge is a way to reduce the risk of default.

So, TIF is not land value capture per se. It is just a means of using increased value (i.e. the growth in

property taxes in a specific area) as security to obtain financing. There is no “new money”; the gains in

property tax revenue caused by infrastructure investment are going to occur whether or not TIF is used;

the TIF is simply an allocation of new taxes to the specific purpose of repaying borrowed funds.3 This

approach can make sense if a local government can only obtain financing by pledging the future tax

growth in a defined area. In jurisdictions that do not have difficulty borrowing, it makes more sense for a

lender or bond buyer to have repayment obligations secured by the entire tax base of the agency, not

just the portion of the tax base inside the TIF area. For these reasons, TIF is not directly relevant to

TransLink’s situation and is not considered in this policy analysis report.

4. Penalties on Low Density Development. Some stakeholders have suggested applying a charge or tax

on low density development as a disincentive to development that is not transit-oriented. Such a charge

would be an indirect form of land value capture, in the same way that DCCs put downward pressure on

a developer’s ability to pay for land. The existing property tax system in BC acts as a kind of disincentive

to maintaining under-developed properties (because property is taxed based on its development

potential) but the use of triple net leases can diminish the effectiveness of this disincentive because the

tax is passed to tenants. There are two reasons why we do not include this kind of charge in this report.

First, such a charge is mainly intended as a disincentive to influence urban development patterns. We

take the view that if there is a desire to limit low density development, this should be accomplished directly

by regional planning policy and by municipal land use planning rather than indirectly by a charge levied

by a regional transportation agency that has no direct statutory role in land use planning or development

regulation. Second, in Metro Vancouver there is a diminishing supply of land available for new low density

residential development. While a charge of this type may be an effective influence on land use, it is not

likely a sustainable long term revenue stream.

2.7 Advantages and Disadvantages of Land Value Capture

2.7.1 Taxes

Governments have a variety of ways to raise tax revenue from individuals and corporations, including income

tax, sales tax (such as PST or gasoline tax in BC), value added tax (such as GST in Canada), user fees, and

property tax. Each of these revenue tools has advantages and disadvantages in terms of fairness,

progressiveness (i.e. rising progressively with income in order to make the tax burden more equitable in its

impact), economic efficiency (minimizing negative impacts of taxation on the economy), the ability to modify

behaviour (e.g. using a carbon tax to reduce fuel consumption), and other factors.

With this wide variety of tax measures available, it is important to consider whether there are particular

advantages and disadvantages to taxing the value of land.

3 There are special circumstances in which a TIF-like instrument creates new revenue for a local government. For example, in Alberta municipalities can create Community Revitalization Levy districts in which the Province agrees that any growth in what would have been the Provincial share of property tax is transferred to the municipality. In this case, it is not the “TIF” that is creating new local money, it is the willingness of the Province to transfer revenue to the municipality.


PAGE 16

The idea of taxing land is not new. In the late 1700’s, Adam Smith advocated taxing land as a means of

generating revenue without reducing total economic output because it does not impede productivity. George

Henry, a 19th century economist, proposed that taxes on income reduce incentive to work and taxes on

production are a disincentive to productivity, but taxes on land do not discourage productive economic activity.

Land investment is passive; capital tied up in land does not generate economic benefits the same way that

investments in business do. Taxing land value can recoup some of the investment that caused land value

gains. Taxing land value can also lead to reductions in land value and house prices, although the advantage

of a lower upfront price (which would lower the requirement for down payment and result in lower mortgage

costs) can be offset by higher ongoing taxation costs.

Note that these are arguments for taxing land but not improvements, which do contribute to productive

capacity and provide benefits such as housing. Taxing land can encourage investment in improvements

(because the tax burden would be spread over more space).

One of the main arguments against recurring taxation of land value is that this tax is unrelated to income or

ability to pay. This concern is often articulated with regard to homeowners whose homes have risen in value

but whose incomes have not. The

counterarguments are that such people can

sell their homes and move to lower value

accommodation or that, in places such as

BC, some households are eligible to defer

property tax (at a very favourable interest

rate) until time of sale. But there is still some

social and political objection to tax policy that

forces people to sell their home, take on

debt, or see their equity decline.

Business owner/occupiers may also face

financial challenges if their taxes rise,

because their business may not generate

enough income to cover the new cost.

Another possible concern is that increased

property taxes can in some cases be passed

on to residential and commercial renters.

The effect of changes in land value on tax revenues depends on the structure of the tax. For example:

• Property taxes in BC are primarily determined by the budget requirements of local government and the

Province. The budget identifies how much property tax revenue is needed, and then this tax burden is

distributed across the assessment base. Changes in value affect how much tax each property pays, but

do not necessarily affect the total tax revenue stream.

• Taxes that are applied to property based on its value (e.g. the Provincial School Tax Surcharge or the

sliding scale used in the Provincial Property Transfer Tax) are affected by changes in land value. Rising

land values will produce more revenue and falling land values will produce less, unless the rates or rate

classes are adjusted.

• Taxes on the proceeds from property disposition (e.g. capital gains tax) are affected by the total volume

and value of dispositions.

When choosing and designing a land value capture approach, there are ways to reduce vulnerability of the

revenue stream to changes in land value.

• can recoup some of the investment that caused the land value gain

• can lead to reductions in land value, which can aid housing affordability

• can encourage investment in improvements

•resilient to changes in land value, as tax rates can be adjusted accordingly

Advantages

...of taxing land value (i.e. not improvement

value).

• land value is unrelated to income or the ability to pay

• may not be affordable for business owners/occupiers

• increased taxes may be passed along to renters

Disadvantages

...of taxing land value.


PAGE 17

2.7.2 Development Charges and Zoning

These approaches apply to new urban development, not to land owners in general. They have two main

advantages:

• These approaches draw revenue from a new group of payers, rather than continuing to charge transit

riders, auto users, and land owners in general. The charges are paid by developers, but the ultimate

impact tends to be a reduction in the value of development land from what it otherwise would be.

However, owners of development property generally enjoy land value gains even though some of the

value is captured by development fees or zoning related contributions.

• There is a clear link between those who benefit (i.e. land owners benefit from land value gains due to

transit investment and upzoning) and those who pay (i.e. some of the potential land value gain is captured

by the public sector).

There are some disadvantages of land value capture approaches that rely on urban development:

• Because the pace of development varies over time, the revenue stream from development charges or

zoning-based contributions will also vary. This form of land value capture is inherently less regular than

property tax.

• Because of land economics, there is some risk that charges on development or zoning impact the viability

of new development if the charges are not carefully calibrated to continue to provide incentives for

developers and for land owners. If the pace of development is reduced, there will be impacts on

affordability. This risk can be managed by ensuring that charges are set appropriately.

• If land values fall, revenues from these sources could fall, in part because of changes in the value of

density and in part because reduced financial performance of projects could reduce their ability to absorb

cost.

2.7.3 Land Acquisition and Disposition

Participation in the land market has these advantages:

• The agency making the investment in transit can directly capture value by controlling property that will

rise in value due to transit investment and upzoning.

• Disposition of surplus lands and air rights provides capacity for new development that would not otherwise

be available, in transit-oriented locations.

• Control over land disposition allows a degree of control over the form and character of development,

which can support affordable housing, transit ridership, cycling, and walking.

• Strategic acquisition and assembly can create attractive development sites that are better than those that

result from a minimalist approach to land acquisition for transit infrastructure.

There are two potential disadvantages of land value capture via direct involvement in the land market:

• New acquisitions require a source of capital. This means (in the short run) diverting capital that could

otherwise have been used to fund transit or repay debt. Of course, the long term objective is that this

investment pays dividends that can be applied to transit.

• There is risk if the land market declines. In a growing region, this risk tends to be cyclical so it may be

that the main concern is one of timing. Revenue from property disposition may be less predictable and

may have to be postponed to avoid disposition during a downturn.


PAGE 18

3.0 Approaches Currently Applied in BC

3.1 Taxes, Development Charges, and Zoning

3.1.1 Federal Government

The Federal Government at present has only one significant form of land value capture, which is tax on gains

from the sale of real property. The gains are considered a capital gain or income, with different tax rates,

depending on the nature of the taxpayer and its business. Personal principal residence property is exempt

from taxation.

In the 2019 federal election, some political parties proposed ways in which the federal government might

engage in additional forms of land value capture, including:

• A tax on foreign property owners, at time of purchase or possibly a recurring tax.

• A wealth tax on high net worth individuals, with such tax applying to all forms of wealth including real

property.

The introduction of either or both of these new forms of taxation might, depending on their magnitude, impact

property values and affect the ability of other levels of government to implement land value capture

mechanisms.

3.1.2 Provincial Government

The Province of BC employs a wide range of land value capture taxes to obtain revenue and to achieve other

policy objectives.

One time

The Province’s one-time sources of land value capture include:

a) A 20% tax at time of purchase on the value of property acquired by foreign purchasers.

b) The Property Transfer Tax, which applies to most title transfers of real property (there are various

exemptions such as newly built homes priced below a defined threshold and homes purchased by first

time buyers). This tax is on a sliding scale: 1% on the first $200,000 plus 2% on the portion between

$200,000 and $2,000,000 plus 3% on the portion over $2,000,000 plus (for residential property only) an

additional 2% on the portion over $3,000,000.

c) Tax on the gains from sale of real property, either as income tax or capital gains tax depending on the

nature of the taxpayer and the nature of the taxpayer’s business. Gains on sale of personal principal

residence property is exempt.

Recurring

The Province employs several recurring means of land value taxation:

a) A large share of annual property tax in BC is paid to the Province. In BC, property tax is levied on 100%

of the value of land and 100% of the value of improvements, so it is not solely a land value capture

mechanism. This taxation system has been in place since 1984. Prior to that, BC had periods in which


PAGE 19

land was taxed at 100% of value and improvements were taxed at a lower percentage. There were even

periods during the early 20th century when property tax was only levied on land value.4

Properties in BC pay property tax to local government, the Province, and regional agencies including

TransLink. The assessment and taxation system requires properties to be divided into classes (e.g.

residential, business, agricultural) each of which has its own tax rate. This is called a variable tax rate

system. Current legislation in BC does not allow municipalities to set different tax rates for land versus

improvements, different tax rates for vacant or under-developed property, different tax rates for similar

properties in different areas, or different tax rates based on value.

b) The Province has implemented a Speculation and Vacancy Tax, which charges an additional annual

percentage of property value on properties in defined taxable regions5 that are not a principal residence

and not rented out, or that are owned by non-residents or people not paying income tax in Canada (so-

called satellite families). The Province’s stated purpose for this tax is to shift vacant dwellings into the

rental market, to decrease the non-local demand for property, and to help make housing more affordable

in the applicable areas.

The tax rate varies based on whether the owner is a Canadian citizen or permanent resident of Canada,

or a satellite family.6 For 2019 and subsequent years, the tax rate is 2% of assessed value for foreign

owners and satellite families and 0.5% of assessed value for Canadian citizens or permanent residents

of Canada who are not members of a satellite family.

In the Lower Mainland this tax is currently applied in municipalities within the Metro Vancouver Regional

District (excluding Bowen Island, the Village of Lions Bay and Electoral area A, but including UBC and

the University Endowment Lands) and in the City of Abbotsford, the District of Mission, and the City of

Chilliwack.

c) The Province has implemented a School Tax surcharge that applies to high value residential properties

(including vacant land but not including purpose-built rental housing), at an extra 0.2% on the portion of

assessed value between $3 million and $4 million plus 0.4% on the portion of assessed value over $4

million. While called a School Tax, the funds go into Provincial general revenue and are not earmarked

for educational purposes. This tax is not based on the residency status of the owner. It is intended to put

downward pressure on the price of the affected properties and raise revenue. This tax is essentially a

means of wealth distribution.

4 For an excellent history of property taxation in BC, see “Land Value Taxation in Vancouver: Rent-Seeking and the Tax Revolt”, Christopher England, 2018, American Journal of Economics and Sociology Vol 77, No. 1.

5 “Taxable Regions” include these geographic areas:

• Municipalities within the Capital Regional District. Excluding Salt Spring Island, Juan de Fuca Electoral Area, and the Southern Gulf Islands.

• Municipalities within the Metro Vancouver Regional District, excluding Bowen Island, the Village of Lions Bay, and Electoral area A, but including UBC and the University Endowment Lands.

• The City of Abbotsford, The District of Mission, The City of Chilliwack, The City of Kelowna, The City of West Kelowna, The City of Nanaimo, and The District of Lantzville.

Exclusions from taxable regions include: Reserve lands, treaty lands and lands of self-governing Indigenous Nations; Islands that are accessible only by air or water; Residential properties under certain ownership (i.e. an Indigenous nation; municipalities; regional districts, governments and other public bodies; registered charities; housing co-ops; certain not-for-profit organizations).

6 “Satellite family” is defined as including “people who declare LESS than 50% of their total combined household income for the year on Canadian income tax returns”…they may pay tax at the highest rate and may not be entitled to all exemptions… This could apply even if the people are Canadian citizens or BC residents. Source: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax/exemptions-speculation-and-vacancy-tax/individuals/international-income#satellite-family.

https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax/exemptions-speculation-and-vacancy-tax/individuals/international-income#satellite-family

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-metro-vancouver.pdf


https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-capital-region-district.pdf


https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-abbotsford.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-mission.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-chilliwack.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-kelowna.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-west-kelowna.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-nanaimo.pdf

https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/speculation-and-vacancy-tax/map-of-lantzville.pdf




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3.1.3 Metro Vancouver

Metro Vancouver is a regional agency that delivers (directly or through subsidiaries) region-wide services

including planning, affordable housing, parks, the regional water network, and regional sewer and drainage

networks.

Metro Vancouver currently uses a one-time form of land value capture, which is the Greater Vancouver

Sewerage and Drainage District Development Cost Charge (GVS&DD DCC) for regional sewer works. This

DCC is levied on new residential, commercial, and industrial construction throughout the service region. A

fee waiver or reduction is available for not-for-profit affordable rental housing. The charge is collected by local

governments at time of building permit issuance (or at subdivision for the creation of new single detached

house lots) and remitted to Metro Vancouver.

Metro Vancouver also charges property tax on all properties within the region. These taxes are included in

the annual property tax bills delivered by local governments. The tax revenue is applied toward Metro

Vancouver’s services in regional planning, regional parks, and affordable housing.

3.1.4 Municipalities

Local governments in Metro Vancouver already make extensive use of land value capture mechanisms to

generate revenue, including both one-time (DCCs, density bonusing and community amenity contributions)

and recurring mechanisms (taxes).

One-Time

a) DCCs

Municipalities in BC use Development Cost Charges (Development Cost Levies in the City of Vancouver),

which are levies on new urban development to pay for community-wide infrastructure. For municipalities other

than Vancouver, DCCs can only be used to raise revenue for water and sewer networks, drainage systems,

road networks, and park land acquisition (with the exception of the small number of resort municipalities which

can use DCCs for affordable housing). The enabling legislation for DCCs is Section 559.2 of the Local

Government Act, which sets out a highly regulated structure for collecting and using DCC revenue. The City

of Vancouver has a similar authority pursuant to the Vancouver Charter; one notable difference is that the

City can use DCLs for a few additional kinds of infrastructure such as child care facilities.

In addition to municipal DCCs in Metro Vancouver, there are also two regional DCCs levied on development

as noted in Section 5.3 (GVS&DD DCC for sewer works) and Section 5.5 (TransLink’s new authority to levy

a regional DCC for transportation infrastructure).

DCCs are technically cost-recovery mechanisms, but their impact on the land market is to put downward

pressure on the amount that developers are able to pay for development sites, so DCCs are an indirect form

of land value capture.

There is a limit to how much a development project can absorb for DCC payments. With local governments,

GVS&DD, and TransLink all charging DCCs, they are essentially competing for a share of this finite capacity

to pay DCCs. This requires caution and coordination in setting DCC rates to make sure that the combined

impact of multiple fees does not have a negative impact on the financial viability or pace of new development.

b) Density Bonusing and Community Amenity Contributions

The structure of land use and development regulation in BC creates the potential for municipalities to obtain

public benefits or revenue through the use of municipal zoning power. This is a direct form of land value


PAGE 21

capture, because municipalities can provide new density (which adds to land value) in exchange for public

benefits such as community facilities, affordable housing, or cash-in-lieu.

These zoning-based tools are unique among land value capture mechanisms because they create the land

value that they are capturing.

Creating new density, via zoning changes, is akin to making new “land” in the sense that the value in an

urban context is derived from what can be done with the property. Developers technically buy land, but what

they are really buying is the development entitlements that come with the land…the land use, height, and

density that can be developed under zoning. Where there is strong demand for new development, changing

the allowable land use and increasing allowable density create a gain in land value. Mechanisms such as

density bonusing or Community Amenity Contributions simultaneously create this value and build in a

structure for allocating this value among the local government (to fund community amenities), the land owner

(to provide an incentive to sell land into the development market), and the developer (to make it worth going

through the time and cost of rezoning).

Density bonusing works like this:

• Section 482 of the Local Government Act and Section 565.1 of the Vancouver Charter give municipalities

the ability to zone land with a basic allowable density, for which no public benefit must be provided, and

a specific supplemental or bonus density which can be obtained in exchange for a prescribed package

of public benefits which can include community facilities, affordable housing, or cash-in-lieu.

• Developers can develop a site under the base density or can obtain the bonus density, assuming the

extra density is marketable and financially attractive.

• The value of the extra density must be equal to or more than the cost of providing the public benefit, or it

will not be of interest to developers.

Community Amenity Contributions are similar (i.e. the exchange of new density for public benefits) but they

are not defined in legislation in the way that density bonusing is.

Municipalities in BC have the sole authority to decide whether a proposed rezoning is in the community’s

interest and should be approved. In making this decision, elected Councils should consider the impact of new

development on the community and can evaluate whether the proposed project yields sufficient benefit to the

community to warrant absorbing the impacts. The acceptability of a zoning -- both to the municipality and to

residents -- can be increased if the project is seen to provide amenities, affordable housing, or other public

benefits that will meet the needs of new residents and address impacts on existing residents. So, the process

of considering a proposed change in zoning often includes negotiations between the local government and

the proponent regarding the public benefits to be provided. The negotiation process can be simplified and

expedited if the local government provides targets (i.e. dollar amounts or specific on-site amenities that are

sought in exchange for each increment in density) but the principle is the same: the value of new density is

calculated and then an agreement is reached on the portion of this value that should take the form of public

benefit.

Almost all municipalities in Metro Vancouver use density bonusing and/or negotiated Community Amenity

Contributions as a means of capturing some of the new land value that is created by upzoning in order to

fund community amenities or infrastructure.

There are criticisms of CACs as a means of capturing land value:

• Some members of the development industry take the position that CACs add to the cost of housing and

therefore make the affordability situation worse. However, CACs are always associated with increased

housing capacity (because CACs are only paid when land is rezoned to higher density) and CACs are in


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effect an exchange of density (which has value) for public benefits, and this exchange is almost always

structured to be financially attractive to land owners and developers. There is no compelling evidence to

indicate that CACs have put upward pressure on housing prices in Metro Vancouver (see for example

“CAC Policy and Housing Affordability: Review for the City of Vancouver”, Wollenberg Munro Consulting

Inc and Coriolis Consulting Corp, April 2019).

• CAC systems are sometimes criticized because the negotiations are not transparent, take too long, and

create uncertainty in the land market. In some cases, these are valid concerns. CACs ought to be

expeditiously negotiated, consistently applied, clearly communicated (to the general public, developers,

and land owners), and structured to ensure that the allocation of land value gains due to rezoning creates

incentives to land owners to sell their land into the market, incentives for developers to seek rezonings

that are consistent with planning policy, and public benefits that deal with the needs and impacts of

development on communities.

If TransLink explores the potential to share in CAC revenues, it will encounter the following challenges:

• Local governments currently have complete control over the zoning process and therefore complete

control over the use of density bonusing or CAC systems, which means they receive all of the revenue

and amenities. There will need to be a compelling case for why they should share these revenues.

• Because there is already a perception in the development industry that CAC systems are time-

consuming, complex, and uncertain, there will be concern if TransLink’s participation adds to these

concerns.

• There is a wide variation across Metro Vancouver municipalities in terms of when and how they negotiate

CACs. TransLink would have to develop an approach that is easily applied in a variety of situations.

• There is a wide variation across Metro Vancouver in the market value of new strata residential, rental

residential, and office density, which means wide variation in the quantum of public benefit that can be

achieved when density is increased. A region-wide uniform approach (as in the new TransLink DCC) will

have to be viable in the low land value parts of the region, while a submarket-based approach will result

in large differences in the revenue that can be derived from different areas.

It is also possible that the Province will explore changes to how local governments collect and use CACs.

The recently completed “Development Approvals Process Review” (published by the Ministry of Municipal

Affairs and Housing in September 2019) documents the results of Province-wide stakeholder engagement

with local governments, the development industry, and others regarding all aspects of development approvals

processes. The report suggests a variety of ways that might be explored in order to increase the predictability

and uniformity of CAC frameworks, including new legislation to regularize the collection of CACs and the idea

of a “super DCC” that covers more kinds of amenity and infrastructure than DCCs can currently be collected

for. The Province has not committed to any course of action, but there may be more attention to this subject.

If the government undertakes a more formal exploration of options, then TransLink should try to be part of

the conversation.

Recurring

a) Property Tax

All local governments raise a large portion of their operating and capital budget through property tax.

The main elements of the local government property tax system in BC are as follows:

• All property is assessed at its current market value.


PAGE 23

• All property is assigned a property class7 based on its current use (e.g. residential, commercial).

• Each municipality adopts a set of tax rates (“mill rates”, or dollars per thousand dollars of assessed value)

that apply to the different classes of property. These rates can vary for different types of property and it

is typical for these rates to be higher for commercial and industrial property than for residential property.

• Other agencies (e.g. the Province, BC Assessment, the Municipal Finance Authority, and TransLink)

apply their allowable taxation rates to the assessed value.

• The tax rates are applied to the land value and the improvements value equally.

b) Taxes on Specific Types of Properties

Local governments in BC generally cannot levy special property taxes on specific types of properties, but

there is one exception.

The City of Vancouver Empty Homes Tax (EHT) levies an annual surtax on the assessed taxable value of

residential properties deemed “empty”. A home is not considered empty if it is a principal residence or rented

for at least six months of the year. From 2016 when the EHT was launched to 2019, the EHT rate was 1% of

the property’s assessed taxable value. In each of the next 3 years the rate will increase by 25% to 1.25% in

2020, 1.5% in 2021, and 1.75% in 2022.

The City’s stated intention is to invest net revenues into affordable housing initiatives, so it is essentially a

form of wealth transfer. Since the EHT was launched in 2016, the program has yielded $39.7 million in net

revenue.

c) Benefitting Area Taxes

Local governments in BC don’t have much ability to levy special property taxes in certain areas, with one

little-used exception. In all other municipalities other than Vancouver, Section 210 of the Community Charter

gives local government the authority to establish a local service area for the provision of a specific service

that applies to properties in a defined area. Properties within this defined area are taxed (in addition to their

basic property tax) to pay for the local service. Similarly, pursuant to Section 500 of the Vancouver Charter,

the City of Vancouver can levy a tax for local improvement projects when the project involves capital

investment by the City that will “specially benefit real property in a limited and determinable area”. Local

improvement taxes in Vancouver are usually only applied for relatively small projects that benefit a few

properties, such as improvements to lanes.

3.1.5 TransLink

TransLink has the ability to use three different land value capture taxes and charges to generate revenue: a

DCC, general property tax, and a benefitting area tax.

One Time

As of 2018, the Province adopted legislative changes that enable TransLink to levy a region-wide DCC on

new development to help pay for transportation investment (SCBCTA Act Section 34.21). The collection of

this new DCC started in January 2020 and revenues are being used to help pay for transit infrastructure. This

is the first time in BC that the Province has allowed the use of DCCs to fund transit and it is the first time that

7 There are 9 property classes in BC: Class 1 Residential, Class 2 Utilities, Class 3 Supportive Housing, Class 4 Major Industry, Class 5 Light Industry, Class 6 Business/Other, Class 7 Managed Forest Land, Class 8 Recreational Property/Non-Profit Organization, Class 9 Farm. Properties can have split classifications if they have several distinct uses that fall into more than one class.


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an agency that is not a local government (i.e. municipality or regional district) has been authorized to levy a

DCC.

The new TransLink DCC is forecast to generate an average of about $29 million (uninflated) per year during

2020 to 2027.

The regional transportation DCC has these features:

• At present, there are different rates for single detached, duplex/townhouse, and apartment units. There

are also different rates for retail/service, office, institutional, and industrial space.

• At present, the rates for each use apply across the entire region. During the three years in which the DCC

system was designed (including extensive consultation with stakeholders in local government and the

development industry) consideration was given to options including common region-wide rates and rates

that varied across the region based on factors such as the intensity of transit service or the level of new

transit investment anticipated in different areas. After considerable discussion and debate, TransLink

adopted the premise that the benefits of regional transit improvement are broadly distributed and do not

necessarily match the distribution of capital investment, so it was decided that the TransLink DCC rates

should be uniform for each land use across the region. The legislation gives TransLink the ability to vary

rates in the future if deemed appropriate.

Recurring

a) Property Tax

Section 25(2)(a) of the South Coast British Columbia Transportation Authority (SCBCTA) Act empowers

TransLink to levy tax on the “net taxable value of land and improvements” throughout the transportation

service region. The legislation only allows TransLink to increase its property tax revenues by more than 3%

per year if the increase is approved by the Mayors’ Council in an investment plan. Prior to 2017, the annual

property tax was structured so that TransLink generally only increased its total property tax revenue by 3%

over the previous year’s tax revenue (with some exceptions). This constraint was presumably imposed as a

means of limiting the exposure of taxpayers to increases significantly above inflation. However, in any given

year the assessment roll consists of the previous year’s property assessment plus growth that is the result of

new improvements or changes in land value due to upzoning. The former 3% limit on tax revenue increase

meant that if the assessment roll grew (by say 2%) due to new construction or land value gains due to

rezoning then the increase on existing property would be limited to 1%, generally less than inflation.

Starting in 2017, TransLink adjusted its approach to calculating increased property tax revenue. There are

now two components to tax revenue growth:

• The tax revenue derived from the previous year’s assessment base can be increased up to 3%. This puts

a limit on the increase that an existing typical taxpayer will absorb.

• In addition, TransLink receives the new tax revenue that comes from applying its tax rate to “new”

assessment base created by development of new improvements or changes in property value due to

rezoning (versus value increase just due to market change).

TransLink is also authorized to collect $18 million per year from a smaller set of property taxes in whatever

proportions TransLink determines, but this amount is not allowed to escalate with inflation. This is known as

the Replacement Tax.

TransLink currently receives a total of on the order of $360 million per year (in 2018) from property taxes, not

including the Replacement Tax.


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b) Benefitting Area Tax

TransLink has the ability to levy a benefitting area property tax surcharge.8 SCBCTA Act Section 25(7) allows

TransLink to “establish different zones…and…adopt different tax rates…in different zones based on the

benefit…as a result of proximity to a transportation station or…major facility constructed or funded by the

authority”.

While this legislation has existed for a long time, TransLink has not elected to use this benefitting area taxation

mechanism. The main reason has been that if proximity to transit infrastructure increases property value and

if this is reflected in assessed values, then such properties will already pay more tax than similar properties

without the transit benefit. Adding a benefitting area tax means that such properties would pay more “basic”

property tax because of their higher value and would also pay a surcharge because of the benefit. This is

not necessarily a reason to avoid using the benefitting area tax, but it is a consideration in gauging the impact

and equity of using the tax. TransLink also benefits from new development around rapid transit stations in

the form of increased ridership and increased property taxes. Properties that benefit from a higher level of

access don’t just enjoy the benefit of increased land value. The owners and occupants of such property also

benefit from the ability to spend less on automobile costs (purchase, operation, parking) and convenience.

So, it may be entirely reasonable to charge a benefitting area property tax surcharge.

3.1.6 Summary of Taxes, Charges, and Zoning Mechanisms Currently

Used in BC

Exhibit 2 and Exhibit 3 summarize the current situation in BC regarding land value capture via taxes,

development charges, and zoning. The main observation that can be made based on the two exhibits is that

there is already an extensive land value capture “landscape” in the Province and in Metro Vancouver. All

levels of government use a variety of means to generate revenue from property.

Exhibit 2: One-Time Land Value Capture Taxes and Charges

“One-time” Approaches Province Metro Vancouver Municipalities TransLink

Property transfer tax

Foreign buyer tax

Capital gain or income tax at sale

(except principal

residence)

Development Cost Charge

(GVS&DD)

(commencing 2020)

Density Bonus and CAC at rezoning

Park land dedication or cash-in-lieu at subdivision

8 TransLink advised that it may need legislative amendments or regulation as part of implementing a benefiting area tax. This would need to be explored if TransLink decides to examine this approach in more detail in subsequent work.


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Exhibit 3: Recurring Land Value Capture Taxes

“Recurring” Approaches Province Metro Vancouver Municipalities TransLink

Property tax

Land value tax

Property tax surcharge on some properties

(school tax

surcharge on high value property)

Benefitting area tax

(local service area charges)

(benefitting area tax

authority, not currently used)

Tax on specific uses

(hotel tax, STR tax)

Vacancy tax

(Vancouver)

3.2 Strategic Acquisition and Development Approaches

The Province, Metro Vancouver, and municipal governments all participate in the land market to achieve

financial, social, cultural, recreational, and housing objectives.

Disposition of surplus property, allocation of public-owned property to specific uses, and acquisition of new

property are commonplace in the region. Typically, the reasons for disposition of surplus land are to generate

revenue for other purposes and/or to guide the use and development of public lands to achieve particular

objectives (e.g. the creation of affordable housing). The large housing developments on the UBC and SFU

Burnaby campuses are examples of public sector agencies taking a strategic approach to the disposition of

land to create a revenue stream.

The public sector is often directly involved in the funding and development of non-market projects, most often

the creation of affordable housing. The Greater Vancouver Housing Corporation (a wholly owned subsidiary

of Metro Vancouver), BC Housing, and some local governments are involved in creating and operating rental

housing, for example.

Direct involvement in market-oriented development projects by the public sector is less common. However,

the development of the Olympic Village, the large outlet mall at YVR, the Anvil Centre in New Westminster,

and various projects by the Surrey City Centre Development Corporation are just a few instances in which a

government entity has participated directly in development. Direct participation in development by

government is not common because governments usually do not want to absorb the risk of losing money.

Under Section 6 of the SCBCTA Act, TransLink has the authority to “…acquire land…in support of…or to

facilitate construction of…the regional transportation system”. This of course includes the ability to buy land

that is necessary for transit construction, and TransLink advises that the SCBCTA Act also provides broader

authority for land acquisition that generates financial and other benefits.

The same section also authorizes TransLink to “…hold, manage, develop, and dispose of land”, which allows

holding property for investment, disposing of surplus land, and participating in development projects.


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To date, TransLink’s involvement in the land market and in development projects has not been extensive:

• Some retail space has been developed in the fare-paid zone of some stations, generating ongoing

revenue and enhancing the system for riders.

• Some surplus properties have been offered to the market, such as the former Oakridge Transit Centre

(which became surplus when a new facility was constructed on a site beside the Arthur Laing Bridge in

South Vancouver) and the surplus land at the King Edward Station on the Canada Line, which included

land adjacent to the station plus air rights over the station.

Exhibit 4: Examples of TransLink Land Disposition


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4.0 Examples of Approaches Used by Other Agencies

Outside of BC

There are many jurisdictions outside of BC that use, or are considering, some form of land value capture

and/or participation in urban development. Property tax is almost universally used to generate local

government revenue, and in the US and Canada there are many cities that use some form of density bonus

or other means of obtaining public benefits or affordable housing in exchange for new density.

This section provides brief descriptions of examples of approaches used in other places.

4.1 Examples of Approaches to Support Transit Investment

4.1.1 Canada

Ontario

While the enabling legislation is different than in BC, Ontario municipalities have the ability to charge

development fees (Development Charges) similar to DCCs or DCLs and they have the ability to obtain

amenities or cash-in-lieu when granting additional density (called Section 37 benefits, they are similar to

density bonus or Community Amenity Contributions).

Metrolinx (Greater Toronto)

In addition to typical transit funding sources, Metrolinx has incorporated a Transit-Oriented Development

(TOD) Program in its 2041 Plan. The aims of the TOD program are to generate revenue through the

disposition of air rights parcels at transit stations, increase ridership, improve the customer experience, and

contribute to city building. Metrolinx does not become a partner or inject additional equity; it makes

development sites available at fair market value to developers.

Calgary Transit

The City of Calgary and Calgary Transit have a city-wide framework for Transit-Oriented Development,

primarily as a means of planning higher density development at transit stations but also as a means of

revenue generation via the disposition and development of public lands. The TOD strategy includes looking

for opportunities to acquire additional lands to enhance the potential for development and identifying publicly

owned sites that can become catalysts for redevelopment. The City specifically looks for strategic land

acquisition beyond infrastructure needs and disposition of remnant parcels post transit construction to recover

investments in transit. The City is also considering alternative sources of transit funding including

development partnerships, leasing public land at transit stations, and new development levies.

Edmonton Transit

The City of Edmonton is pursuing initiatives to facilitate higher density development at transit stations and

generate revenue and ridership. One initiative is to facilitate the redevelopment of City-owned park-and-ride

sites at suburban stations. The City has also become involved in actual development, with mixed results. In

one project (Station Pointe) the City invested capital to transform a large former industrial site into a residential

community with parcels available for sale to developers. City investment included streets, services, parks,

and amenities but take-up by developers has been very slow. In another project, the City has partnered with

a private sector developer to ready a former commercial site for residential development.


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4.1.2 USA

Portland, USA

A new light rail link between the airport and the existing transit system was funded in part via a tax increment

financing district to support borrowing, an agreement with a developer that provided a capital contribution in

exchange for development rights on a large property served by the new line, and a levy on passengers

arriving at the airport.

Kansas City, USA

Kansas City has a Transportation Development District (TDD) that raises revenue for streetcar (LRT)

construction. The package includes a sales tax (maximum of 1%) on retail sales within the TDD boundary, a

real estate tax surcharge on property within the TDD boundary, and a special assessment on surface parking

lots in the boundary. These assessments are limited by state law to 20 years.

Miami-Dade County, USA

This county has established a Transportation Infrastructure Improvement District within a half mile of transit

corridors, in which any increase in property taxes above a defined base rate is allocated to pay for transit

infrastructure. This is not a new source of revenue or a net gain in revenue; it is a mechanism to ensure that

tax revenues above a threshold are channeled to pay for transit.

Pennsylvania, USA

The state has authorized the creation of Transportation Revitalization Investment Districts, in which a portion

of future property tax revenue gains can be earmarked for transit infrastructure. There is not necessarily new

revenue, but an ability to pledge a portion of revenue to the repayment of loans or bond issues. Pennsylvania

is also one of a few jurisdictions in the USA in which a significant number of municipalities use what is called

split rate property tax, with a higher rate on land value and a lower rate on improvements value.

Chicago Transit Authority

CTA has an ambitious capital program to expand and improve the regional transit system. Locally-generated

sources of funding include bond financing, property taxes, and a dedicated sales tax.

New York Metropolitan Transit Authority

The New York MTA is planning a $50 billion capital plan to address deferred maintenance and

expand/improve the system. The locally generated sources of funding include bonds, an automobile toll on

the Central Business District, a progressive tax on the sale of high value real estate, and a sales tax on

internet retail sales.

4.1.3 Outside North America

Crossrail (Elizabeth Line), London UK

The Crossrail project has been under construction for over a decade. A limited section went into service in

late 2019, but full opening is not expected until 2021. It is a massive addition to the London transit system.

Funding came from a wide variety of sources, but it is notable that significant contributions came from

developer contributions, a community improvement levy, and the sale of surplus lands.


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Australia

Jurisdictions in Australia use various forms of land value capture including a “stamp duty” (similar to BC’s

Property Transfer Tax), development charges, and property tax. Some public agencies in Australia are

considering more broad-based approaches to land value capture that could be applied at the federal, state,

and local levels. So far, government has produced research and discussion papers on topics such as the use

of public lands and new forms of property tax but has not yet enacted new tools.

New Zealand

The government of New Zealand is considering land value capture as a means of funding new infrastructure

projects. Based on published statements from officials, one measure being considered is to tax the

incremental growth in land value caused by transit improvements, measured by comparing the growth in land

value for similar properties that have not directly benefited from transit investment.

Sao Paolo, Brazil

This South American city has taken an unusual approach to raising revenue from new development rights:

• The city identifies a redevelopment zone in which it wants to see increased density.

• The city defines how much additional floor space, beyond that allowed under current zoning, is

appropriate in the area and then issues “bonds” for this density.

• The bonds are auctioned; the purchasers of the bonds are then able to use the density on properties they

own within the redevelopment zone (or they can sell it to others in the area).

• The revenue raised from the auction is invested in housing and infrastructure in the redevelopment zone.

This has similarities to a Community Amenity Contribution system (developers provide cash or amenities in

exchange for density) and to Vancouver’s system of transferable density for heritage projects (the density is

not confined to a specific single site, as in a typical rezoning), but the Sao Paolo approach is of course

different in that the new density is auctioned to the highest bidder rather than negotiated with individual

property owners. Another key difference is that for the system to work, most or all properties in the

redevelopment zone must be deemed to be appropriate to absorb extra density.

Hong Kong

The Hong Kong Mass Transit Railway Corporation funds transit infrastructure through involvement in urban

development at stations. The Corporation obtains from government the development rights for land on and

beside transit infrastructure and then tenders development opportunities to the private sector. The corporation

enters into profit sharing arrangements or leases. A similar approach is used in Hong Kong to support the

creation of affordable housing.

Japan

Japan uses a system call Land Readjustment to facilitate the assembly, replotting, and infrastructure

investment for lands on the perimeter of growing urban regions. Areas that are appropriate for redevelopment

are often owned by large numbers of individuals who on their own do not have the wherewithal for assembly

or major infrastructure investment. State agencies are created for readjustment projects and have the

authority to assemble the land, invest in infrastructure, and distribute proceeds to the participants.


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4.2 Examples of Approaches to Support Affordable Housing

Seattle, USA

The City of Seattle includes a Housing Levy in its property tax. The levy raises funds that are used to construct

affordable rental housing for low income households. This levy has been in place since 1981 and it has

supported the construction of around 12,000 units. The City estimates the median cost per home owner to

be about $125 per year. The Housing Levy must go before voters for renewal every few years.

Los Angeles and Seattle Regional Transit Agencies, USA

Sound Transit in Seattle and LA County Metro Transit are similar to TransLink in that they are regional

agencies that serve a large number of local governments. In both regions, the transit authorities use a form

of land value capture to help fund transit infrastructure and to assist in the creation of affordable housing.

They use what they each call “strategic land acquisition”. When planning and implementing transit

infrastructure projects, they:

• Locate stations where there are good opportunities to assemble land.

• Acquire more land than the minimum needed for construction.

• Ensure that post-construction, the surplus land will be in configurations that are easy to develop.

• Take advantage of the land value gains due to transit and upzoning.

• Offer surplus land to the market, in some cases at full market value to fund transit and in some cases at

less than market value for the provision of affordable rental housing. Los Angeles Metro also provides

some loans on favourable terms to affordable housing projects.

In addition to the regional transit agency involvement, both the City of Seattle and the City of Los Angeles

make extensive use of density bonusing to achieve affordable housing and amenities.

Vienna, Austria

Vienna is often cited as an example of addressing housing affordability via a large and sustained involvement

in rental housing construction by the state. Vienna has systematically acquired a large portfolio of urban land

that is used for the construction of new rental housing by government or by non-profits. As a result,

approximately 60% of housing is non-market and rent-controlled to maintain affordability.

4.3 General Observations

In a large proportion of the examples around the world, land value capture mechanisms and in some cases

participation in urban development are mainly considered as a means to fund infrastructure, particularly

transit as there is a correlation between transit improvements and increased value. There are fewer cases

where land value capture is used to fund affordable housing.

The most common land value capture approaches appear to be some form of property tax (in many cases a

benefitting area surcharge), development fees, and the creation and disposition of new development rights

(i.e. density).9 Many transit agencies also use the strategic acquisition and disposition of land as a means of

generating revenue and aiding the creation of affordable housing.

9 It is worth noting that CAC-like mechanisms are used in many cities in Canada and the US. While many landowners and developers have the view that the value of additional density should belong entirely to the landowner, this is not the premise of many North American rezoning frameworks. New York, San Francisco, Seattle, Los Angeles, Toronto, Halifax, and of course Vancouver are just a few examples of cities that approve new density in exchange for public benefits.


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It appears that few transit agencies become directly involved in urban development projects (beyond leasing

or selling sites).

Tax increment financing is often used as a means of securing loans or bond issues. This vehicle allows

agencies to secure investment capital, by providing assurance for repayment, but it does not generate any

new revenue.

There do not appear to be many instances in which land value capture is used specifically to suppress land

values or discourage investment in land. In fact, many of the jurisdictions are counting on land value increases

so they can tap the gains to pay for infrastructure.

Based on this survey, several local governments in Metro Vancouver could be considered in the forefront of

using a comprehensive approach to land value capture in the form of annual property taxes, development

charges, and CACs.

Other jurisdictions show possible avenues for refinement including the use of benefitting area taxes,

differential tax rates on land and improvements, and special levies for transit or affordable housing.


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5.0 Transit Investment, Rezoning, and Land Value

If TransLink is going to gain broad support for using land value capture and urban development to achieve

its goals, it will be important to demonstrate that transit investment creates land value and creates good

business opportunities for being involved in the market.

This section examines the link between transit infrastructure and development activity and also evaluates the

relative significance of transit investment versus rezoning in generating gains in land value. The comparison

of the land value created through rezoning with land value created by transit investment (i.e. improved transit

access) is analyzed using case studies.

5.1 Transit Investment and Densification

Exhibit 5 shows that during the past 5 to 10 years in areas of Metro Vancouver outside downtown and the

Broadway Corridor there has been an increasing tendency for new office development and new multi-family

strata residential development to occur within walking distance (800 metres) of rapid transit stations. The

gains are dramatic; as of 2019 over 80% of new office growth and almost two-thirds of new strata residential

growth are in rapid transit station areas. This demonstrates two key tendencies:

• Developers perceive that there is strong market appeal for office space and housing that is served by

transit.

• Local governments tend to direct high density development to transit-served locations.

This means there is compelling evidence that transit investment is a key input to densification and to the

ability of local governments to obtain public benefits based on the additional land value that results from

rezonings at transit-oriented locations.

This also means that there will be strong market interest in any development properties that TransLink can

make available by the disposition of surplus sites or air rights over transit infrastructure at rapid transit

stations.

Exhibit 5: Office and Residential Strata Development at Transit Stations

Source: Based on analysis by Coriolis Consulting using in-house office floorspace data and residential sales and listings data from NHS Live. For context, since 2009, 53% of new office development occurred in Downtown/Broadway Corridor and 47% occurred outside of these locations. *Note that sales of new strata residential units are from Jan 2015 to Sept 2019 and active listings as of Oct 2019.


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5.2 Transit Investment and Price/Rent Premiums

5.2.1 Sales Price Premium for Multi-Family Strata Residential Units

In principle, it seems reasonable to assume that there would be a premium for living near a rapid transit

station or a rapid bus stop, in part because of the value of added convenience from having access to transit

and in part because of the potential financial benefit of using transit versus owning and operating a vehicle.

However, there are many other important considerations that come into play when deciding where to buy or

rent a place to live such as affordability; residential market outlook; proximity to family, friends, work, school,

and commercial services; safety; general culture and prestige/image of the neighbourhood; prestige/image

of the building; walkability/bike-ability; and building or neighbourhood amenities/recreation features. Rapid

transit access is only one of many factors that could affect the marketability and pricing of new strata

residential projects.

In comparing sales evidence for strata residential units in buildings near rapid transit (defined as being within

800 metres of a rapid transit station) and buildings in similar markets not near rapid transit, it is not possible

to control for all differences other than proximity to a rapid transit station to isolate the sales price premium

associated with this difference. Factors such as the age of the building, quality of the building/finishes,

neighbourhood characteristics, site specific features, building amenities, building prestige, unit layout/

specifications, and marketing/branding of the building can blur the analysis. However, by looking at buildings

of about the same age and about the same quality in similar market conditions with and without rapid transit,

the results can illustrate the order of magnitude sales price premium associated with rapid transit access.

We analyzed residential sales data for buildings with and without rapid transit access in New Westminster

(Sapperton/Downtown vs Uptown), Coquitlam (Burquitlam vs Austin Heights), Richmond (near and not near

rapid transit stations), Surrey (Surrey City Centre vs Guildford), the west side of Vancouver (Cambie Corridor

vs Broadway/Arbutus), and the east side of Vancouver (Kingsway near and not near rapid transit).10 There

was not useful sales evidence in Burnaby because there aren’t buildings of a similar quality built around the

same time in both rapid transit and non-rapid transit locations (as most development in Burnaby has occurred

near rapid transit stations).

Based on the average sales price per square foot for units that sold during the six-month period from March

to August 2019 in several similar aged/quality “pairs” of buildings, the price premium for rapid transit proximity

is illustrated by these examples:

• In Vancouver, the average sales price for units that sold in Wall Centre Central Park (less than 800m to

Joyce-Collingwood SkyTrain Station) during March to August 2019 was 1% higher than the average sales

price for units that sold at Kensington Gardens (more than 800m away from Nanaimo SkyTrain Station)

during the same timeframe.

• In Surrey, the average sales price for units that sold at Venue (less than 800m to Gateway Station) during

March to August 2019 was 7% higher than the average sales price for units that sold at Guildhouse (more

than 800m to Surrey Central Station and King George Station) during the same timeframe. Both projects

were completed in 2018.

• In New Westminster, the average sales price for units that sold in Trapp + Holbrook (less than 800m to

New Westminster Station and Columbia Station) during March to August 2019 was 9% higher than the

average sales price for units that sold in Viceroy in Uptown New Westminster (more than 800m to a rapid

10 Residential unit sales data is from the Real Estate Board of Greater Vancouver online MLSLink subscription database.


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transit station) during the same timeframe. The Viceroy in Uptown New Westminster is older, so the

premium is likely partly attributable to transit access and partly attributable to the age of the building (and

possibly other factors).

• In Vancouver, the average sales price for units that sold in Edward by Mosaic (less than 800m to King

Edward Canada Line Station) during March to August 2019 was 10% higher than the average sales price

for units that sold at the Leveson (more than 800m to Marine Drive Canada Line Station) during the same

timeframe. Edward by Mosaic was completed in 2019 and the Leveson was completed in 2018, so the

premium could be partly attributable to transit access as well as Edward by Mosaic being newer and

having a more central location (and possibly other factors).

The sales evidence for most “pairs” of buildings suggests a price difference in the range of 1% to 10% at

rapid transit served buildings versus non-rapid transit served buildings in Metro Vancouver, although this

could overstate the premium because of differences in other characteristics such as quality of the

neighbourhood, building age, and building amenities which are challenging to control for.

This range is similar to the findings of a recent study by Canada Mortgage and Housing Corp. that examined

the impacts of GO train expansion on house prices in Hamilton-Niagara. The November 2019 CMHC study

estimated that house prices were between 4% and 9% higher in various areas in Hamilton-Niagara than they

otherwise would have been without the expansion of transit.11

Overall, we think it is reasonable to assume that there is a transit-related premium of up to about 5% for strata

residential unit sales prices at rapid transit stations in Metro Vancouver compared to similar non-rapid transit

served locations. This may seem like a relatively low premium to some observers who assume that transit

accessibility is attractive and important in the housing market. However, it is important to keep in mind that

most higher density locations in Metro Vancouver have reasonably good transit access, whether it is by rapid

transit or by bus. It is not really possible to find many examples of “transit” versus “no transit” new development

projects, so the comparison is really between projects near rapid transit and projects with good bus service.

5.2.2 Lease Rate Premium for Commercial Space

As with residential sales prices, in principle it seems reasonable to assume that there would be a premium

for leasing commercial space near a rapid transit station or a rapid bus stop because of the added

convenience and potential to reduce commuting times. However, there are many other important

considerations that come into play when businesses are deciding where to rent commercial space such as

affordability; proximity to where the business owner lives; proximity to where employees live (and whether

these locations are transit-served); proximity to commercial services; availability of amenities such as day

care; prestige/reputation of the landlord/management company; opportunities for expansion; and availability

of parking. Rapid transit access is only one of many factors that could affect the marketability and pricing of

commercial space.

11 CMHC, “Housing Market Insight: Hamilton-Niagara – GO Train Expansion: The Impact on House Prices in Hamilton-Niagara.” November 2019. The analysis found that the Confederation GO Station increased house prices in East Hamilton by up to 4%, Niagara Falls GO Station increased house prices in that area by up to 7%, the St. Catherines GO Station increased house prices in that area by up to 8%, the Confederation GO Station increased house prices in Stoney Creek by up to 8%, and the West Harbour GO Station increased house prices in Hamilton Centre by up to 9%.


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We reviewed four indicators of the potential lease rate premium for commercial space near a rapid transit

station:

• Evidence of differences in asking or achieved office lease rates for buildings of a similar quality, age, and

type (e.g. high density office projects) in rapid transit served and non-rapid transit served locations.12

There is very little vacancy in the office market in the region, so data on asking lease rates is limited. In

addition, most new office space in the region is being built near rapid transit stations so there is limited

comparable product not served by rapid transit. However, comparing evidence in transit-served and non-

transit served office buildings in New Westminster, Burnaby, Surrey, and Vancouver suggests that office

lease rates are in the range of 2% to 20% higher in transit-served locations. This likely overstates the

premium associated with transit-access, as transit-served locations also tend to be more amenity-rich

neighbourhoods with more urban office buildings.

• BC Assessment Authority data on the assessed values for existing office buildings within 800m of a rapid

transit station compared to similar buildings that are not within 800m of a rapid transit station in several

locations throughout the region.13 Comparing similar quality buildings in the same municipalities (to

control for property tax differences) suggested that office buildings near rapid transit stations have

assessed values in the range of 2% to 5% higher than comparable office buildings in similar markets that

are not near rapid transit.

• Interviews with commercial real estate brokers about the magnitude of the lease rate premium for office

space near rapid transit versus comparable space not near rapid transit. Commercial brokers noted that

the demand for office space outside of downtown Vancouver is highly driven by employee attraction and

retention, and convenient access to rapid transit is a key factor in the locational decision for many

businesses that occupy office space. Commercial brokers noted that the premium is on the order of about

10%, although this reflects a combination of rapid transit accessibility, lower office vacancy near rapid

transit stations, and a difference in the type of space that is available (i.e. high density, urban office space

in amenity-rich locations near rapid transit versus lower density, business park office space).

• Studies by others about the potential office lease rate premium associated with being located near a rapid

transit station in the region. For example, Jones Lang Lasalle (JLL) previously published a “Rapid Transit

Office Index” for the Metro Vancouver region. In the Q1 2016 Outlook edition of this report, JLL reported

that the average asking net office lease rates for the inventory of office buildings with greater than 10,000

square feet within 500m of a rapid transit station in Vancouver, Burnaby, Surrey, Richmond, New

Westminster, and Coquitlam were in the range of 10% to 30% higher than the average asking net office

lease rate for the inventory of office buildings with greater than 10,000 square feet outside of 500m of a

rapid transit station in the same municipality. This likely overstates the premium associated with rapid

transit accessibility, because the inventory of space near rapid transit stations contains a much higher

share of new buildings and there are many other features that could contribute to lease rate differences

when looking at the overall inventory of office space within 500m and further than 500m of rapid transit

stations within a municipality, but it helps illustrate an upper bound.

Based on these indicators, we think it is reasonable to assume that there is a premium of up to about 10%

for commercial lease rates at rapid transit stations in Metro Vancouver compared to similar non-rapid transit

locations.

12 Office lease rate data is based on internet research using www.spacelist.ca and major brokerage websites. 13 Assessed values were obtained from BC Assessment Authority via https://www.bcassessment.ca/Property/AssessmentSearch.

https://www.bcassessment.ca/Property/AssessmentSearch


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5.2.3 Residential Rents

While there likely is a market rent premium associated with proximity to rapid transit, the case study analysis

in this study did not include rental residential properties for these reasons:

• New rental residential development in most of the region supports little or no land value, which is why

new rental construction has depended on mechanisms such as cost reduction (e.g. DCC waivers or

reduced off-street parking requirements) or incentive density. So, there is little or no land value growth

associated with most new rental residential development, meaning there is not much opportunity for land

value capture even if there is a rent rate premium associated with units near rapid transit.

• Existing rental units have rent increases controlled by the Residential Tenancy Act. Because these units

are only allowed to adjust to market rent at the time of turnover, it is not possible without great effort to

assemble a data set that would allow the isolation of a rent premium associated with rapid transit

proximity.

• Limited new rental construction makes it difficult to find sufficiently comparable new projects to be able

to identify and isolate a residential rent premium for transit proximity.

5.2.4 Implications for Case Studies

Based on market research and sales evidence, empirical evidence, and a review of other studies, there

appears to be a premium for commercial rents (up to 10%) and strata residential unit sales prices (up to 5%)

near light rail rapid transit stations in this region. We use these premiums in the case study analysis.

5.3 Transit Investment and Rezoning: Case Studies

As noted above, the comparison of the land value created through rezoning with land value created by transit

investment (i.e. improved transit access) is analyzed using case studies. The detailed analysis for the case

studies is contained in Appendix 1. For each case study, financial models were constructed for the following

scenarios:

• “Base case” financial performance of a development site assuming no rezoning and no transit influence.

This either reflects value under existing zoning or under existing use, depending on the case study.

• “Rezoning only”, which shows the financial performance of rezoning the development site to a density

typical for the sub-market, in the absence of a price premium for rapid transit proximity.

• “Rezoning with transit”, which shows the financial performance of rezoning the development to a density

typical for the sub-market and incorporating a premium (in sales prices or rent rates) for improved transit

access.

Municipal Community Amenity Contributions (CAC) policies are not included14 so the case studies illustrate

the total land lift, the portion of the total attributable to the rezoning (increased density), and the portion

attributable to the transit premium prior to CACs.

The following sections summarize the multi-family residential case studies and commercial case studies.

14 Including the City of Vancouver’s Developer Contribution Expectation (DCE) in the Broadway Corridor.


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5.3.1 Summary of the Multi-Family Residential Case Studies

Key points about the multi-family residential case studies are as follows:

1. Locations. Locations for multi-family residential case studies were selected based on where rapid transit

expansions are planned or have recently been completed: the Broadway Corridor (where the new

Broadway Subway Project will extend rapid transit from VCC-Clark to Arbutus), Burquitlam (where the

Evergreen Extension went into service in December 2016), Fleetwood (located on the planned extension

to Langley), and Lynn Creek (which will be served by the Marine Drive RapidBus connecting West

Vancouver with Phibbs Exchange).

2. Transit Premium. Based on the analysis in Section 5.2, we used a transit premium of 5% for multi-family

unit sales price for enhanced light rail rapid transit and a lower transit premium (1%) for enhanced transit

access in the form of rapid bus.

3. Tenure. The case studies assume strata multi-family residential development to show the maximum

extent to which improved transit access generates land value relative to upzoning (because strata

residential land values are much higher than rental residential land values), except for one market rental

scenario in the Broadway Corridor (where market rents are high enough to support a significant land

value) to illustrate the economics of redevelopment under both strata residential and rental residential.

The results of the multi-family residential case studies are summarized in Exhibit 6. The analysis illustrates

that:

• Transit investment is responsible for a significant share of the gains in strata multi-family residential land

value in transit-oriented areas. The dollar value gain in land value varies considerably around the region,

but it appears that rapid transit investment can create 20% or more of the gain in land value from a

combination of upzoning and transit investment.

• The share of land value gain created by transit investment is higher in areas with lower land values,

reaching over 40% in some cases.

Exhibit 6: Summary of Multi-Family Residential Case Studies ($M indicates $millions)

Case Study

FSR (Existing)/ Rezoned

Strata Residential Sales Prices ($ psf)

Existing Value

Supportable Land Value

with Rezoning


with Rezoning

and Transit

Without transit

With transit

Land Lift

Case Study #1: C-3A Site in Broadway Corridor (strata)

(3.0) 6.0

$1,475 $1,549 (5% higher)

$22.8M $45.4M $50.3M • $22.6M from rezoning (82%)

• $4.9M from transit (18%)

• $27.5M total (100%)

Case Study #2: C-3A Site in Broadway Corridor (market rental)

(3.0) 6.0

Average rent psf:

$3.73

Average rent psf:

$3.92 (5% higher)

$22.8M $13.3M $15.2M Redevelopment to market rental is not financially viable on this site even with the transit premium

Case Study #3: C-2 Site in Burquitlam (strata)

(1.05) 4.5

$855 $900 (5% higher)



• $11.9M total (100%)

Case Study #4: CH-1 Site in Fleetwood (strata)

(1.0) 4.0

$760 $800 (5% higher)

$3.1M $0.9M $3.8M Not a redevelopment candidate without the transit premium; transit premium makes project financially viable

Case Study #5: Single family lot assembly in Lynn Creek (strata)

(0.35-0.45) 2.5

$800 $808 (1% higher for

rapid bus)



• $4.7M total (100%)


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5.3.2 Summary of Commercial Case Studies

Key points about the commercial case studies are as follows:

1. Locations. This analysis uses a higher land value and a lower land value location for the commercial

case studies to show the range in contribution of upzoning and improved transit access to land value

increases in different sub-markets with rapid transit access (or planned rapid transit access) in the region:

Uptown Office Precinct in the Broadway Corridor (where the new Broadway Subway Project will extend

rapid transit from VCC-Clark to Arbutus) and Surrey City Centre (where the City of Surrey’s recently

adopted new City Centre Plan envisions transit-oriented redevelopment of low-density properties near

rapid transit stations including around King George Station on the existing Expo Line).

2. Transit Rent Premium. Based on the analysis in Section 5.2, the analysis uses a transit premium of

10% for commercial lease rates for enhanced light rail rapid transit.

The results of the commercial case studies are summarized in Exhibit 7. The analysis supports the following

conclusions:

• Without the premium associated with rapid transit, office development is not financially viable in many

suburban locations in the region.

• With rapid transit, high density office development is financially viable in some locations but the lift in land

value from rezoning and transit investment is marginal.

Exhibit 7: Summary of Commercial Case Studies ($M indicates $millions)

Case Study

FSR (Existing)/ Rezoned

Office Lease Rates ($ psf net)

Existing Value


with Rezoning


with Rezoning

and Transit

Without transit

With transit

Land Lift

Case Study #6: Site in Broadway Corridor Uptown Office Precinct

(3.0) 6.0

$37 $40.70 (10% higher)

$15.3M $11.2M $16.9M Not an office redevelopment candidate without the transit premium; transit premium makes project financially viable

Case Study #7: Site in Surrey City Centre

(0.8) 3.5

$28 $31 (10% higher)

$10.7M -$5.0M $6.6M Office redevelopment is not financially viable on this site even with the transit premium

5.4 Conclusions

The analysis of regional development patterns and the case studies show that:

1. There is strong evidence that transit investment is a major contributor to the ability of local governments

to plan high density housing and employment nodes and to obtain public benefits from the extra land

value created by the approval of new density.

2. There are significant opportunities for TransLink to earn revenue through an ongoing program of strategic

acquisition and disposition of land, especially at rapid transit locations. By buying land early in a transit

project planning process, TransLink could benefit from general increases in the market value of land,

increased value due to improved transit access, and increased value due to rezoning to allow more

density (even after allowing for municipal CACs on additional density).

3. There will be strong market interest in development properties that TransLink can make available by the

disposition of surplus sites or air rights over transit infrastructure at rapid transit stations.


PAGE 40

4. Municipalities are currently the only entities to obtain revenue or benefits from CACs and density

bonusing, but transit investment is responsible for a significant share of the gains in multi-family

residential land value in transit-oriented areas, due to the premium achieved by market residential units

in areas with high levels of transit service. This lends support to the idea that a portion of CACs on transit-

oriented multi-family residential rezonings could be allocated to fund transit investment.

5. The ability to charge a CAC on transit-oriented office development is marginal (and municipalities typically

do not charge CACs on office development), so it is likely not worth TransLink exploring the idea of CAC-

revenue sharing on office development.

6. There is potential for TransLink to earn revenue by participating in development projects, particularly at

transit-served locations where development risk is mitigated by strong market interest.


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6.0 Impacts of Different Approaches

There are strong arguments in favour of TransLink making more use of land value capture to fund transit

investment, and there are several approaches that can be considered. There are also reasons in favour of

TransLink participating in urban development projects to fund transit investment and achieve other objectives.

A key consideration is the kinds of positive and negative impacts these approaches would have on land

owners, developers, tax payers, and local governments. This section reviews the potential impacts of different

approaches.

6.1 Impacts on Land Owners, Tenants, and Developers

6.1.1 Property Taxes (General, Surcharge, Benefitting Area)

The impacts of a higher land value tax, a property tax surcharge, or a benefitting area tax vary with the type

of property and the nature of any leases or rental arrangements.

Groups that benefit from these kinds of taxes could include:

• Those buying their first home, if the tax is large enough to reduce the market value of housing. However,

the reduction in home purchase price could be offset by the ongoing cost of the tax to the owner. Note

that people selling a home would see a loss in equity if the tax reduces market value.

• Any property owner whose taxes fall due to a redistribution of the overall property tax burden. For

example, if the intent of a new property tax is to be revenue neutral, then some properties affected by the

tax will pay more and some will pay less. Even if the new tax is intended to generate additional total

revenue, the structure of the tax could be such that some properties pay more and some pay less, with

a net gain in total tax revenue.

• Those who benefit from any new infrastructure or affordable housing constructed using the tax revenue.

• Those whose land values rise as a result of new infrastructure funded by the tax (although in a benefitting

area tax this increase in value is all or partly offset by the tax).

• Development land owners, if a new recurring land value tax replaces CAC or DCC/DCL systems.

The cost of a new recurring land value tax is borne by the property owners (or their tenants) who pay the tax.

Only with a benefitting area tax is there a direct link between those who benefit and those who pay.

All property taxes are initially paid by the owner of the property, but the nature of the impact varies depending

on the type of property and in some cases the cost is shifted to others (tenants).

Residential Rental Properties

In most residential rental properties, rents are structured on a gross basis meaning tenants do not directly

pay the property tax; the landlord pays the tax using some of the rental income. Because residential rents in

BC are set by the market and by regulations under the Residential Tenancy Act, the effect of property tax

increases on residential rents is as follows:

• For units rented at full market rent, there is no impact on tenants. The increased tax cost cannot be

passed on in the form of “above market” rent, so landlord net income is reduced. This can have the

negative consequence of reducing developer/investor interest in constructing new rental housing if the

tax is so high that net income is not sufficient to make projects viable. If the pace of rental construction is


PAGE 42

too low (as we have seen in this region over the last several decades), vacancy is too low and rents rise

faster than inflation.

• For units that have had rent growth limited by the Residential Tenancy Act, rents are typically below

current market rates. If these below-market rates are then allowed to rise faster than inflation because

increased operating costs (including property taxes) result in higher allowable rent increases, then

increased property tax will result in these rents being higher than they otherwise would be (although still

below market).

Commercial Properties

In many commercial properties, leases are structured so that the tenant pays rent and pays a pro rata share

of the property tax (and other operating expenses). If one takes the view that over the long term, commercial

tenants can pay a maximum total amount to occupy space (regardless of how this value is parsed into rent,

tax, or operating costs) then, theoretically, property taxes do not add to the cost of occupancy. The impact of

property tax in the long run is to reduce the market rent that can be charged by landlords.

However, in the short run commercial tenants are locked into rent payments based on their leases which are

typically 3 to 5 year terms. In this case, the tenants must pay the increased tax but have no ability to offset

the cost by reducing rent. This can be very challenging for small businesses, especially those that are already

paying very high property taxes because they happen to occupy potential redevelopment sites with high

value.

Businesses that own their own premises will absorb any new property tax, so net income from the business

will be reduced unless the owner can reduce other costs or increase revenues to offset the tax.

Homeowners

The impact of annual property tax on residential land values or housing prices is not as clear as one would

like. The academic research does not always show a direct link between property tax and value, possibly

because property taxes tend to be small (on an annual basis) relative to the value of the property, there are

many other more significant factors that affect value, and property owners may not expect to own property

long enough to absorb the long term impact.

Financial analysis would suggest that a large increase in property tax (i.e. large enough to stand out among

other factors) would lead to a reduction in property value, so it is reasonable to assume that a significant new

tax on residential land would result in a reduction in the market price of affected freehold and strata units.

This would be a disadvantage for owners (their equity falls) and an advantage for buyers (prices are lower),

but the upfront affordability benefit of a lower purchase price (a lower down payment, lower mortgage

payments, or both) would be somewhat offset by higher ongoing property tax costs.

Additional broad-based taxes on land value would affect all home owners in the targeted category of property,

not just those who own redevelopment sites. This approach would enable taxing authorities to benefit from

market-wide increases in land value regardless of the cause, rather than linking new taxes to specific benefits

generated by specific investments (such as transit) or specific decisions (such as rezoning).

However, because land value tax is not linked to the income of the owner, one possible impact is that some

residential property owners may not have enough income to absorb a recurring tax. Such owners have the

option of selling and moving to a lower-value property, if possible, or if they are eligible (mainly older owners

of residential property) they can defer the tax until they sell the property. A property owner’s ability to defer

taxes is constrained if there is not sufficient equity after allowing for secured lines of credit, reverse mortgages,

or traditional mortgages.


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6.1.2 Development Charges

Development charges such as DCCs or DCLs are technically infrastructure cost recovery mechanisms

because they collect revenue from new development projects to pay for community-wide networks such as

roads, water, sewer, or parks. Development fees are not simply added to the end sales prices or rent rates

of units, as these are determined by supply and demand for housing units in the market. Because of the way

development sites are valued in the market, development charges have the effect of putting downward

pressure on the amount developers can pay for land. While a development charge may be imposed for the

purpose of paying for infrastructure, its economic impact is to capture what otherwise would have become

land value.

This does not necessarily mean that land values are declining; it means that development fees can cause

the pace of land value growth to be slower than it otherwise would.

In the face of this downward pressure on land value, there are two possible outcomes:

• As long as land is still significantly more valuable as redevelopment property than as holding property (in

its current use), there is not likely to be a reduction in the flow of land to the redevelopment market. In

this case, there is not a negative impact on the pace of development, the viability of development, the

price of new product, or overall housing prices.

• If development fees are too high, however, developers cannot offer enough to compete land away from

purchasers who want to retain the existing use (e.g. single detached houses or older low-density

commercial property). This means that the flow of land to redevelopment is reduced, so the pace of new

construction is reduced. If demand remains strong, reducing the pace of new development will cause all

housing prices (not just the price of new units) to rise.

As long as development charges are set carefully, they do not have a negative impact on project viability or

housing affordability. The cost of levies such as DCCs is absorbed by the owners of redevelopment land.

However, in a region like Metro Vancouver, where there are several DCC layers (municipal, GVS&DD,

TransLink), it is important to monitor the cumulative impact of these levies rather than look at each DCC in

isolation.

The parties that benefit from the DCC system are those that use the new infrastructure, those whose property

value is increased by the new infrastructure, and (indirectly) those whose property taxes are lower than they

otherwise would be because some infrastructure is paid for by DCC revenues rather than property tax.

6.1.3 Density Bonusing and CACs

Rezoning creates new development density that has land value. Community Amenity Contributions (CACs)

obtained in exchange for this new density capture some of the value created by rezoning that would otherwise

become additional value for the owners of development sites. The CAC funds are used to provide public

amenities and affordable housing.

CACs do not add to the market price of housing because CACs are always associated with an increase in

housing capacity and, in any case, housing prices are determined by demand and supply forces. CACs can

help address housing affordability if new strata or market rental density is offered in exchange for affordable

housing benefits.

CACs are paid by developers but they receive valuable density in exchange, so there is not a net cost to

them. The cost could be said to be absorbed by land owners (who would otherwise have obtained all of the

value of new density), but only if one assumes that rezonings would be approved even if no public benefits

result.


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The parties that benefit from the CAC system include those who use the new amenities and infrastructure,

those whose land value is increased by the new amenities and infrastructure, developers who earn additional

profit by developing the additional density, households who benefit from any new affordable housing provided

as part of the CAC, and (indirectly) those whose property taxes are lower than they otherwise would be if the

amenities and infrastructure were funded via property tax.

6.1.4 Land Acquisition and Disposition

The acquisition and subsequent resale or lease of land by public entities can generate revenue and add to

housing supply, so there are positive outcomes for infrastructure funding and housing affordability.

One common strategy for land disposition as a land value capture tool is advance acquisition of more land

than is needed for transit construction and subsequent sale of rezoned development sites with transit access,

either to help pay for the transit or to provide sites for affordable housing.

There is no direct cost to any party that results from public sector involvement in land acquisition and

disposition, unless a particular transaction results in a loss that must be covered from another revenue source.

The main benefit is that there is less reliance on all other sources of revenue, including property tax.

One way to take advantage of land value capture using public land is to lease rather than sell property. When

a land lease expires, there is an opportunity to take the land back if necessary for a civic purpose (thereby

eliminating the need to acquire a site) or there is an opportunity to re-lease the land at the current market

value, taking advantage of land value growth over the life of the lease. Of course, this requires either that the

current occupants pay market value for a lease renewal or that the property is made available under a new

lease for redevelopment.

6.1.5 Development

The involvement of a public agency in development can have positive impacts for those who benefit directly

from the project, such as tenants who benefit from affordable housing. There are not usually any negative

impacts, as the total extent of market participation is typically not large enough to cause concern about

competition with the private sector.

Because of the risks involved in development, the greatest impact is potentially on the agency itself in the

event that a project creates a financial loss that must be made up from other funding sources.

6.1.6 Summary of Impacts

Exhibit 8 and Exhibit 9 summarize the foregoing review of impacts. Three main conclusions are supported

by this review:

• One-time land value capture taxes and charges affect property owners but not tenants.

• Recurring taxation approaches to land value capture affect property owners and in some cases tenants.

• Strategic land acquisition/disposition and involvement in development projects do not have negative

impacts on other participants in the land market.


PAGE 45

Exhibit 8: Impacts of One-Time Taxes, Charges, and Zoning Land Value Capture Mechanisms Capital Gains Tax at Sale

Taxes at Purchase Development Charges Density Bonusing and CACs

Residential tenants No No No

Commercial tenants No No No

Landlords Yes No No

Homeowners or buyers Yes No (unless DCCs so high that pace of development is slowed)

No

Developers Yes No (reduces bid price for land) No (receive density in exchange)

Development site owners Yes Yes (puts downward pressure on site value)

No (but they don’t get all the lift)

Exhibit 9: Impacts of Recurring Taxes and Strategic Land Disposition and Development

All Forms of Property Taxes (General, Land Only, Surcharges for Affected

Properties, Benefitting Area Tax for Affected Area)

Land Disposition and Development by Public Sector

Residential tenants No, if rent is market

Yes, if rent is below market

No (tenants benefit from supply increase)

Commercial tenants Yes, in short run (bound by lease)

No, in long run (downward pressure on rent)

No

Landlords Yes, reduces NOI or room for rent growth No

Homeowners or buyers Yes No

Developers Yes, while they hold land for development No (developers benefit from site availability)

Development site owners Yes, but may be recovered from tenants No

6.2 Impacts on Other Levels of Government

Revenues raised by land value capture via taxes or charges imposed by a particular agency necessarily

impact other government agencies that draw on the same revenue source. At present in BC, the Province

uses some property related revenue sources that are not available to other agencies, such as the Property

Transfer Tax, the foreign purchaser tax, and the school tax surcharge on high value residential properties.

Local and regional agencies, though, all rely on the same main revenue tools.

Assuming there is a limit on the total amount of property tax that is acceptable (financially and politically) or the

amount of charges on new development that is viable, then any revenue collected by TransLink from these

sources is revenue that could otherwise be collected by local governments in the region using the same tool.

For this reason, local governments and regional agencies in Metro Vancouver will pay close attention to new

or increased land value capture using taxes or charges imposed by TransLink. When the new regional

TransLink DCC was under discussion, municipalities were keenly aware that the new DCC would affect their

ability to raise their own local DCCs and would require them to take on the administrative process of collecting

the revenues and remitting them to TransLink. They supported the new DCC because they saw the value in

new regional transportation investment, they generally agreed with finding a new revenue source (rather than

increasing property taxes), and they recognized that the new DCC was relatively small compared to existing

charges. Any new property tax or move to share CAC revenues will have to garner the same kind of support

and would also require municipalities to administer collections/remittance.


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Increased land acquisition/disposition or involvement in development projects by TransLink will not impact

other levels of government because there would be no reduction in their ability to collect revenue. Increased

activity by TransLink in strategic land acquisition/disposition or involvement in development projects may

create interest in collaboration from other public sector agencies who hold relevant properties or rights.


PAGE 47

7.0 Stakeholder Perspectives

7.1 Summary of Stakeholder Perspectives

In December 2019, TransLink and the consultants convened an initial set of workshops with representatives

of the Provincial government, Metro Vancouver, local governments in Metro Vancouver, the regional

development industry, and other interested groups. These initial workshops were intended to describe the

scope of work for this project, summarize some of the analysis, and provide a preliminary indication of the

possible revenue approaches that seemed to have the best potential for TransLink in the near term.

In January 2020, representatives of the same stakeholder groups were given a copy of a preliminary draft

version of this report and invited to a second workshop to discuss the draft report. TransLink also gave

stakeholders time to further review the draft report and provide written comments after the workshop.

Key messages from the stakeholders are summarized below.

Sharing Revenues from CACs and Density Bonusing

• There is broad local government opposition to sharing CAC or density bonus revenues with TransLink.

Local governments tend to see this approach as competition for shares of an existing revenue source

and they prefer that TransLink try to find new revenues. Local governments noted that municipalities have

few revenue tools available to them so they rely on CACs and density bonusing to fund the community

amenities, services, and infrastructure needed to support growth such as community centres, cultural

facilities, libraries, fire halls, and affordable housing. Many municipalities also noted that, in keeping with

Provincial guidelines, they invest CAC revenues into the immediate community from which they are

collected. Some noted that they control zoning, which they see as the primary instrument of creating new

land value. They also noted that municipalities in this region have very different rates of growth so

municipalities with the most development (via rezonings which is when CACs can be charged) would

contribute the most towards transit investment in a CAC revenue-sharing model.

• Some municipalities noted that CAC revenues could be smaller in the future as municipalities explore

ways to increase affordable housing in new projects (which reduces the ability to pay a CAC).

• One municipality also noted that TransLink participation in the CAC process may increase the complexity,

uncertainty, and processing time for new developments.

• Only one municipality expressed being open to the idea of CAC revenue-sharing on the condition that

revenues only be used for new rapid transit construction.

• Developers are of the view that the CAC process is generally too complex, time-consuming, and

uncertain, so they are reluctant to have TransLink do anything that adds to these concerns. However,

UDI expressed support for TransLink receiving a share of CAC revenues from local governments

recognizing that transit infrastructure contributes to creating land value in this region. UDI suggested the

idea of a formula-based fee to be paid by developers to TransLink around transit stations in exchange for

additional density as opposed to a new negotiated CAC. UDI noted that rental housing and commercial

developments are unlikely to be able to contribute any significant CAC revenues to TransLink, in contrast

to strata residential development projects.

Benefitting Area Tax

• Some stakeholders are supportive of a benefitting area tax, subject to the details about where it is levied

and the amount of the tax. Some stakeholders noted that implementation of a benefitting area tax would


PAGE 48

be facilitated by the existing property value assessment system which makes it easy to quantify the value

of properties closer to transit. Some stakeholders noted there is a rationale for such a tax (because

properties near transit benefit from accessibility), and it may encourage under-developed sites near

transit stations to be redeveloped with higher density uses which support transit ridership.

• Some stakeholders expressed concern about “double” taxing properties (because higher assessed

values means properties near transit already pay more basic TransLink property tax than similar

properties not near transit).

• Some stakeholders expressed concern that a benefitting area tax could result in resident opposition to

new rapid transit projects and concern that a benefitting area tax around transit stations could discourage

development in those locations.

• Many local governments expressed concern that a benefitting area tax may have the unintended

consequence of displacing small businesses as well as organizations in the arts, culture, and non-profit

sectors because property tax increases would be passed on to tenants through their leases. These

stakeholders noted that analysis would be needed to estimate potential impacts (and presumably find

ways to mitigate those).

• UDI suggested that TransLink could consider phasing in a very small benefitting area tax at new and

existing transit stations as the rapid transit system is expanded, because all property owners near transit

stations are likely to see property value increases as the rapid transit system is enhanced and expanded.

Strategic Land Acquisition/Disposition and Participation in Urban Development

• There was broad support for TransLink becoming more creative and active in the strategic acquisition

and disposition of property, recognizing that market conditions fluctuate and this could require careful

planning/analysis and a long term view. One local government suggested that TransLink coordinate land

acquisition/disposition activities with local governments to ensure alignment of land use objectives and

that TransLink could consider creating an arms length development corporation.

• There was broad support for TransLink participating in development projects, with appropriate measures

to mitigate risk, which could include building up a portfolio of income-producing properties (e.g.

commercial space, rental housing).

Property Transfer Tax

• There was general support for TransLink participating with Metro Vancouver and local governments in

lobbying the Province for a share of Property Transfer Tax.

Affordable Housing

• There were differing opinions among stakeholders about whether or how TransLink should help develop

or fund affordable housing. Some stakeholders support the idea of TransLink helping to develop or fund

affordable housing including making surplus development sites available or participating in development

projects. On the other hand, some see the provision of affordable housing as the responsibility of the

Province, Metro Vancouver, and municipalities so TransLink should focus on just complying with

affordable housing policy requirements in any developments that it participates in or sites it makes

available for development.

• Some see opportunities for intergovernmental collaboration in the development of lands near transit to

advance affordable housing objectives.


PAGE 49

Other

• The development community noted that development fees, costs, and taxes can only be accounted for

by developers in valuing development sites if the land is purchased after the announcement of the

fee/cost/tax, so it is essential to provide very early notice before new charges are implemented.

• Some stakeholders noted that TransLink recently adjusted its property tax structure and introduced the

new regional DCC for transit, so time may be needed to evaluate the impacts of those costs before

introducing new ones.

• Some stakeholders commented that Project Partnership Agreements provide an opportunity for

TransLink and municipalities to agree upon how land along new rapid transit corridors will be treated

(including how affordable housing will be supported and how CAC collection will be handled).

• Some stakeholders commented that TransLink should continue to seek ways to diversify its funding

sources beyond land value capture, including a regional mobility pricing system.

• Some stakeholders commented that TransLink will likely need to combine one-time charges, recurring

charges, and development-related activities, rather than adopt a single approach.

• The development industry cautioned against exploring capital gains tax, as this is a complex political and

financial topic that TransLink should not get drawn into.

7.2 Response to Stakeholder Input

The input from stakeholders was clear, comprehensive, and constructive, but also challenging in some

respects.

There is broad support for three of the potential revenue sources: a greater involvement in land

acquisition/disposition, greater involvement in urban development, and seeking an arrangement with the

Province for sharing Property Transfer Tax revenues.

There is significant concern on the part of local governments about sharing CAC and density bonus benefits.

This is understandable, as local governments currently do not have to share these benefits and they rely on

them as a major source of capital funding for amenities, affordable housing, and some kinds of infrastructure.

However, it is clear that transit investment supports densification and is responsible for a significant share of

the land value gains that result from investment in transit. For this reason, transit should be considered an

appropriate candidate for a share of the benefits that flow from rezoning and densification in areas served by

transit investment. One of the underlying premises of land value capture is that some of the value should be

available to help pay for the infrastructure that creates the value in the first place. Of course a large share of

the benefits from rezoning must be allocated to meeting the needs of growth, but TransLink should take the

view that it is reasonable for it to receive a share of the benefits. In exploring this option further, TransLink

should take a collaborative approach and should recognize the concerns of, and potential impacts on, local

government.

There is also significant concern about the possible impacts of a benefitting area tax, particularly on small

business and non-profits. This is a legitimate concern because of some consequences of the structure of the

property tax system. However, some points need to be made in response. First, several local governments

in the region have been increasing property taxes at more than the rate of inflation (and local government is

responsible for around half of the total property tax bill on most properties). A new TransLink benefitting area

tax is likely to be small in comparison to municipal increases and may mean that local government has to be

more careful in its own tax-setting decisions. Second, a benefitting area tax is one of the most direct available

means to capture some of the land value growth that is associated with enhanced transit investment. Third,


PAGE 50

the Province is considering ways to mitigate the impact of the tax system on small business. Fourth, areas

around rapid transit stations are expected to undergo redevelopment, so the problem of small businesses or

non-profits absorbing the whole tax burden for under-developed properties should diminish. Certainly

TransLink should be sensitive to potential impacts but a benefitting area tax, which is already contemplated

in legislation, should be explored further in our view.

Stakeholder contact also indicates that there is a range of perspectives about the appropriate role for

TransLink in the provision of affordable housing. Some stakeholders argue for a substantial role, while others

note that affordable housing is the responsibility of other agencies. TransLink is in a unique position to

facilitate the provision of transit-oriented affordable rental housing but it will have to make careful, deliberate

decisions about the extent to which it should allocate resources to housing.


PAGE 51

8.0 Possible Directions for TransLink

Based on all of the foregoing analysis, there is a wide range of approaches that TransLink could explore to

generate more revenue and further its objectives regarding affordable housing and increased support for

walking, cycling, and transit ridership.

The next step is to narrow the range, to identify the approaches that TransLink should consider in much more

detail. The goal is not to narrow the approaches down to select one preferred approach, but to identify the

approaches that are worth considering in greater detail. TransLink may explore and eventually seek to

implement a combination of approaches.

We use four steps to winnow the list:

• First, we review the possible approaches to see how they align with TransLink’s goals. This allows us to

flag any approaches that are particularly suited or unsuited to what TransLink wants to achieve.

• Second, we review each possible approach to see if there is any compelling reason to drop any from

further consideration at this time.

• Third, for the candidates that warrant more consideration, we evaluate them using criteria including

revenue potential, sustainability, and ease of implementation.

• Finally, based on the evaluation, we identify those that have the greatest potential for generating revenue

and achieving TransLink’s goals.

8.1 Aligning Approaches and Objectives

Exhibit 10 lists the main alternative approaches that have been identified and indicates whether they align

with TransLink’s objectives of generating revenue (for capital projects or for operating costs), supporting

transit-oriented affordable rental housing, and supporting walking, cycling, and transit ridership. Supporting

transit-oriented affordable rental housing and walking, cycling, and transit ridership could include using

revenues to support these goals or could mean providing physical opportunities to facilitate/build affordable

housing and walking, cycling, and transit supportive infrastructure. Exhibit 10 makes this distinction.

As indicated in the exhibit, all of the approaches can generate revenue for transit. DCCs and CACs are only

applicable to capital investment, but all of the other approaches generate revenue that could be applied to

capital or operating costs.

All of the approaches except DCCs generate revenue that could be applied to transit-oriented affordable

rental housing if TransLink elects to allocate resources to this objective. The TransLink DCC is structured so

that the revenue can only be applied to transportation capital investment. CACs and taxes create revenue

that TransLink could allocate to affordable housing. Land disposition and development could generate

revenue or could involve foregoing land value or profit revenues in order to invest directly in the creation of

affordable housing.

Only land disposition and participation in development would give TransLink the direct ability to physically

shape the form and character of development to promote walking, cycling, and transit use and the direct

ability to physically provide sites for (or develop projects that include) affordable rental housing. In selling or

leasing surplus lands, TransLink could require that developers use project design, the mix of uses, and in-

project facilities (e.g. support for cycling) to support non-auto transportation. By developing projects,

TransLink can control these directly and can allocate funds to go beyond what a private sector developer

might do.


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Exhibit 10: Alignment with TransLink’s Objectives

Revenue for Investment

Revenue for Operations

Increase Walking, Cycling, Transit Use

Transit-Oriented Affordable Rental Housing

Revenue Physical Opportunity

Revenue Physical Opportunity

Capital Gains Tax at Sale

Taxes at Purchase

Development Cost Charge

Density Bonus and CAC at rezoning

Property Tax (General, Surcharge, Benefitting Area)

Land Value Tax

Strategic Land Acquisition/Disposition

Development

Based on this review, all of the possible approaches align with the objective of increasing revenue for

transportation investment, although tax approaches have the advantage of generating funds for capital and

operating costs as well as revenue that could be applied to affordable housing. Density bonus, CACs, and

DCCs have more narrow revenue applicability, as they are confined to capital investment and probably only

for transit.

Strategic land acquisition/disposition and participation in development are the only approaches that would

allow TransLink to have a direct role in the provision of transit-oriented rental housing and in shaping the form

of development to support transit ridership, walking, and cycling.

8.2 Evaluating the Options and Identifying Those to Consider

Further in the Near Term

8.2.1 Capital Gains Tax

Only the Federal and Provincial governments have the power to levy income tax. This authority has not been

devolved to any lower order of government, so it seems highly unlikely that one regional agency (i.e.

TransLink) could be granted this taxation tool.

There is increasing discourse in Canada regarding changes to capital gains tax as part of an approach to

dealing with income inequality. There are strong voices on both sides of this conversation, particularly

regarding the pros and cons of encouraging capital investment via tax policy and regarding the exemption

that applies to principal residences. This is an important public policy debate that is likely to play out over

years to come, involving all levels of government. The question for TransLink is whether it should enter this

arena at this time. We do not see any value to TransLink of investing time and resources in pursuing this tax

ability, and it could become a divisive distraction.

Potential: Do not explore further.


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8.2.2 Foreign Purchaser Tax

This kind of tax has been introduced by the Province as part of a strategy to reduce non-local demand for

residential real estate. In the recent Federal election, some political parties floated the idea of a Federal tax

with a similar objective. It seems highly unlikely that a regional agency would be given a special ability to

directly influence international investment in real estate in Canada.

Potential: Do not explore further.

8.2.3 Property Transfer Tax

To date, only the Province has this taxing authority, which it has used to generate revenue and to try to reduce

non-local demand for residential property. In 2017, Metro Vancouver estimated that this region generated

over 75% of the Provincial revenue from this tax (which generates on the order of $2 billion per year), and so

on behalf of local governments and regional agencies has been lobbying the Province to share these

revenues to apply them directly to regional needs.15 There is regional interest in applying some of this money

to affordable housing. There is also a compelling argument that affordable transportation helps reduce the

impact of housing costs, so some of the revenue could be applied to transit investment.

The Province has not made any commitment to share these revenues.

If the Province considers revenue-sharing, there would be several complex policy considerations:

• How much of the tax should be distributed out to local and regional agencies and how much should be

retained by the Province?

• If any is distributed, should it be proportional to the amount paid? This might seem a fair approach, but it

is worth noting that for a very long time the Province’s share of property tax revenue (which is mainly

intended to fund the public K to 12 education system) has been collected based on property value and

distributed in the form of per student grants to fund school operations.

• If any is distributed, should it flow to regional agencies (e.g. Metro Vancouver, TransLink), local

governments, or a combination?

• What should the funds be used for? Given the intent of raising the tax rate to help address housing

affordability, it might be argued that the funds should be directed to the construction of affordable housing.

This matter will not be easily resolved and it is not likely to be seen as a TransLink issue per se. TransLink

has an interest in the idea of distributing property transfer tax revenues, but is not in a strong position to lead

this initiative.

Potential: Participate with Metro Vancouver and local governments in efforts to influence the Province, but

do not make this a centerpiece in TransLink’s near future work on funding options.

8.2.4 Revisions to TransLink DCC Framework

The legislation that enables the TransLink DCC already allows for the possibility of increasing rates.

Collections began in January 2020 and the first increase in rates has already been locked in for 2021 (based

on a consultation process with the development industry that resulted in phasing in the charge).

The legislation also allows the possibility of differential DCC rates across the region, but in the work leading

to the creation of the new DCC there was a strong preference for uniform rates based on the premise that

15 Metro Vancouver, “Provincial Property-based Taxes in the Metro Vancouver Region.” 4 April 2017.


PAGE 54

the benefits of transit investment are distributed widely and not necessarily proportional to where the

investment happens.

In the future, there may be more willingness in the region, among industry and local government, to explore

the idea of a tiered DCC structure (with higher rates in areas with the most intense service), but as the ink is

barely dry on the current framework there would likely be little support for making changes in the early years

of this new charge.

Potential: Plan ahead for inflationary adjustments to DCC rates, but do not change the DCC framework at

this time. Monitor collections and watch carefully to see if there is any evidence of negative market impacts.

In the longer term, revisit the question of whether the regional DCC should have different rates in different

areas.

8.2.5 CAC and Density Bonus Revenue Sharing

Transit investment clearly supports the ability of local governments to plan for higher density residential and

commercial development. Transit investment also contributes to increased land value because of the market

premium for prices and rents at rapid transit locations.

Transit, therefore, has a major role in creating the urban economics circumstances that enable density

bonusing and rezoning to provide public benefits, which means a compelling case can be made for TransLink

to have access to some of this revenue potential.

Local governments will reasonably take the view that public benefits from density bonusing and rezoning are

needed to provide the amenities and infrastructure needed to support larger, higher density communities.

However, local governments must go through a priority-setting exercise to allocate the public benefits from

rezoning to local amenities such as daycare or community centre space, emergency facilities such as fire

halls, library space, affordable housing or other needs. Rather than viewing the allocation of benefits as a

competition between TransLink and municipalities, there is a case for having a collaborative conversation

about how transit helps support densification and contributes to land value growth and about how transit

should fit into the prioritization of investments that should be funded out of the revenues from CACs and

density bonusing.

Potential: Explore further. Engage in a dialogue with regional municipalities about possible approaches to

allocating a portion of the benefits from CACs and density bonusing to transit investment.

8.2.6 Across-the-Board Increase in Property Taxes

The Mayors’ Council has expressed a clear preference for finding revenues other than by further loading up

the existing sources. There is probably very little political or public support for a widespread property tax

increase at this time, although it of course exists as an option if required for a new TransLink investment plan.

Potential: Unless it becomes necessary to raise sufficient revenue for TransLink investment plans, do not

select this as a preferred option for additional revenue in the short term.

8.2.7 Land Value Tax

Current BC legislation does not allow general property tax on land only, or different tax rates for land and

improvements. The only tax tool that is somewhat like a land value tax is a parcel tax, as allowed under

Section 200 of the Community Charter, to recover the cost of a specific service that benefits specific

properties. If the parcel tax is allocated based on site area or site frontage, then the tax is applied without


PAGE 55

reference to the value of improvements so it can be considered a kind of land value tax. There are some

shortcomings with parcel taxes:

• They are either applied to the whole community or to the specific set of properties that benefit from a

service.

• They are structured as a cost recovery mechanism, so the amount of the tax is not based on the value

of the property.

A true land value tax based on land value is not possible in BC under current legislation, although such a tax

would have these advantages:

• It taxes the portion of property value that is directly affected by infrastructure investment.

• Land value taxes can encourage more intensive use of property, as owners have an incentive to maximize

the area of improvements over which to spread the land tax.

While there are strong proponents of land value tax as a means of redistributing income and shaping housing

demand, there are also opponents who are concerned about the impact on home owners, business owners,

and tenants because there is no direct connection between the tax and the ability to pay.

It seems unlikely that TransLink alone would be given the ability in BC to tax land at a different rate than

improvements, so there is not much incentive for TransLink to try to push this agenda for its purposes.

Potential: Monitor the positions of the Provincial Government, Metro Vancouver, and local governments in

the region for any signals that a broader approach to land value taxation is gaining support and then be part

of the conversation as an important property tax stakeholder.

8.2.8 Benefitting Area Tax

TransLink already has the legislative power to implement a benefitting area tax.16 While still a form of property

tax, it is a new approach that links tax directly to the value and accessibility created by transit investment

which could attract less opposition (and potentially more support) than a region-wide increase in property tax.

Like property tax, this revenue could be applied to capital investment or operations and is ongoing.

One concern is that a benefitting area tax could be portrayed as making some properties “pay twice”. If transit

access confers extra property value, then all properties in a benefitting area are already paying more property

tax because of their higher value. A benefitting area tax would add a surcharge to these properties. However,

such properties enjoy several benefits, including higher property value, higher accessibility to transit, and

higher marketability for attracting tenants or purchasers. The rationale for adding the benefitting area tax is

essentially that it makes the tax progressive, with properties with very high transit access paying a larger

share of value than properties with less access.

UDI noted that one approach would be to consider phasing in (with early advanced notice) a very small

benefitting area tax at new and existing transit stations as the rapid transit system is expanded.

Potential: Consider further, including examining different approaches to defining benefitting areas and

confirming whether legislative amendments or regulation would be needed to implement a new benefitting

area tax.

16 TransLink advised that it may need legislative amendments or regulation as part of implementing a benefiting area tax. This would need to be explored if TransLink decides to examine this approach in more detail in subsequent work.


PAGE 56

8.2.9 Strategic Land Acquisition and Disposition

TransLink already engages in land disposition and acquisition, so this is not a new revenue tool. TransLink

will presumably continue to market properties that (in whole or in part) become surplus to transportation needs

and will continue to acquire land for transit construction. However, TransLink can become more creative and

aggressive in the land market, in several ways:

• Exploring the potential to market portions of TransLink owned sites that are not entirely needed or to

market air rights above existing transportation facilities that will remain.

• Exploring partnerships in locations where TransLink and other owners could cooperate to create

development opportunities. For example, there are locations along the Expo line right of way (which is

owned by BC Hydro) where there are opportunities for TransLink and BC Hydro to combine their interests

in land to make new development sites.

• Acquiring additional properties when buying land for transportation investment, when there are

opportunities for assembly that will result in strong development opportunities after transportation

construction is complete.

Because TransLink is engaged in long term planning for new transit investment, it is in an excellent position

to acquire good quality development properties well in advance of new transit construction. TransLink can

take advantage of general increases in market value, the new value created by transit investment, and new

value that is associated with increased density.

Involvement in the land market will also give TransLink more ability to shape development and integrate land

use and transportation. When disposing of property, via lease or sale, TransLink can exert some control over

the mix of uses (to require affordable housing, for example) and the form and character of development, to

be supportive of walking, cycling, and transit ridership.

Potential: Consider becoming more creative and active in the acquisition and disposition of land, as a means

of generating revenue and shaping urban development at transit-oriented locations. Develop a strategic plan

for greater involvement in the acquisition and disposition of development sites, with guidelines for examining

TransLink’s existing portfolio of properties and to guide acquisitions of new properties.17


Direct participation in development projects could be a new source of revenue for TransLink, as well as the

most direct possible means to shape development and integrate land use and transportation.

There are several ways that TransLink can benefit from direct involvement in urban development:

• TransLink can earn revenue (profit) from being involved in building and selling market-oriented

development projects, For example, rather than selling or leasing property it can take on the role of

developer (i.e. finance and build the project, market the space, earn the profit). This could be done alone

or in partnership with other developers.

• TransLink could participate in joint ventures with other agencies that provide affordable housing.

TransLink could for example provide some of its development parcels to non-profits or public sector

housing providers for the construction of affordable rental housing. However, it is important to understand

17 TransLink’s current guidelines set the objectives of adhering to applicable laws, bylaws, and municipal approval requirements and having a positive financial business case for acquisition/disposition decisions. A strategic plan would provide more detailed guidance and parameters.


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that this would reduce the revenue from the disposition of such sites by allocating benefits to affordable

housing rather than transit investment.

• TransLink can build a portfolio of income-producing property, such as retail space, office space, and

rental housing at transit-oriented locations to generate an ongoing source of income.

• TransLink can design and create projects that include affordable housing and that support walking,

cycling, and transit ridership. In these cases, TransLink would be allocating revenue to housing or support

for alternative modes of travel rather than retaining the revenue for investment in new transit

infrastructure.

It is important to note that these sorts of projects are very different from simply selling or leasing development

parcels or air rights to developers. Selling or leasing parcels will generate revenue but does not involve

exposure to development risk. Direct involvement in a project (e.g. investing equity and taking responsibility

for development decisions) involves risks. For this reason, transit agencies in North America tend to be

involved in strategic land acquisition and disposition but not directly involved in residential or commercial

development. However, there are ways to manage and mitigate these risks.

Potential: Consider being involved in development projects that can achieve TransLink’s objectives for

revenue, affordable housing, and supporting walking, cycling, and transit ridership. Develop a strategic plan

for greater involvement in development projects, with guidelines for examining TransLink’s existing portfolio

of properties and to guide development of new properties.18

8.3 Examining the Approaches with Potential in More Detail

Based on the work so far, five approaches stand out as warranting more examination:

1. Creating a benefitting area tax, as already allowed under the SCBCTA Act.

2. Exploring the potential to enter into CAC or density bonusing revenue sharing arrangements with local

government.

3. Participating with Metro Vancouver local governments in efforts to lobby the Province to share property

transfer tax revenues.

4. Becoming more creative and active in the strategic acquisition and disposition of land.

5. Participating in urban development projects.

Each of these approaches is evaluated using these criteria:

• Alignment with TransLink objectives: Each approach is evaluated in terms of its ability to generate

revenue, support affordable housing, and support walking, cycling, and transit ridership.

• Potential revenues: TransLink uses a revenue benchmark of about $25 million to $50 million per year for

analyzing the feasibility and impacts of different funding sources and when evaluating new funding

streams.

• Sustainability of the revenue stream.

• Potential impacts.

• Ease of implementation.

18 TransLink’s current guidelines set the objectives of adhering to applicable laws, bylaws, and municipal approval requirements and having a positive financial business case for development decisions. A strategic plan would provide more detailed guidance and parameters.


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Alignment with TransLink Objectives

A benefitting area tax would generate new revenue for TransLink. TransLink could apply Benefitting Area Tax

revenues to new transportation capital investment, infrastructure that supports walking, cycling, and transit

use, and to transit operations. TransLink could also apply these revenues to other objectives (e.g. affordable

housing) or a combination, but TransLink advised that it is unlikely to apply benefitting area tax revenues to

affordable housing as it does not do so with its existing property tax revenues.

As a tax, it would not directly provide housing or shape the form of urban development.

Potential Revenue

The revenue potential depends on several variables:

• The definition of benefitting areas.

• The tax rate(s) applied within these areas.

• Whether or not the general property tax rate is adjusted downward to partially offset the increase.

So, the approach we take is to illustrate how the tax might be structured in order to achieve the revenue

threshold of $25 million per year.

As shown in Exhibit 11, TransLink’s total property tax revenue was around $373 million in 2018 (including the

Replacement Tax), equal to about 20% of total revenue. During 2014 to 2016, property tax revenue grew by

3% or less per year (consistent with the former maximum of 3%) but since then has grown by over 4% per

year because of the change to apply the 3% cap to previous tax revenue and then add the growth from new

assessed value due to new development. Exhibit 12 shows the effect of this policy change, indicating the

new property tax revenue in 2017 and 2018.

Exhibit 11: TransLink Property Tax Revenues 2014-2018 ($millions) 2014 2015 2016 2017 2018

Property Tax Revenue a $306.6 $314.7 $324.5 $339.1 $355.8

Replacement Tax Revenue b $17.9 $17.8 $18.0 $17.8 $17.9

Subtotal - Property Tax + Replacement Tax Revenue $324.5 $332.5 $342.5 $357.0 $373.7

Total Revenue from All Sources $1,453.8 $1,627.7 $2,152.3 $1,688.4 $1,849.2

Annual Increase in Property Tax + Replacement Tax Revenue 2.7% 2.5% 3.0% 4.2% 4.7%

Property Tax + Replacement Tax Share of Total Revenue 22% 20% 16% 21% 20%

Source: TransLink, Annual Statutory Reports. Note a: Levied on Property Classes (1) Residential, (2) Utilities, (4) Major Industry, (5) Light Industry, (6) Business/Other, (8) Recreation/Non-Profit, and (9) Farm class. Note b: Levied on Property Classes (1) Residential, (2) Utilities, (4) Major Industry, (5) Light Industry, (6) Business/Other and cannot exceed $18 million per year.


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Exhibit 12: TransLink Property Tax Revenue Before and After 2017 Policy Change ($millions)

2014 2015 2016 2017 2018

Actual Property Tax Revenue $306.6 $314.7 $324.5 $339.1 $355.8

Property Tax Revenue if total could only increase by up to 3% per year

$306.6 $314.7 $324.5 $334.2 $344.3

Additional Property Tax Revenue associated with 2017 adjustment

n/a n/a n/a $4.9 $11.6

To raise $25 million to $50 million in new revenue, total TransLink regional property taxes would have to rise

by about 7% to 14%.

A benefitting area tax would have to be a larger percentage increase because it would be applied on only a

portion of the assessment base.

If, for illustrative purposes, it is assumed that a new benefitting area tax would be applied to properties within

400 metres of an existing rapid transit station (on the Expo, Millennium, Canada, and Evergreen Lines as at

2019), as shown in Exhibit 13 there would be a total assessment base of about $167.5 billion, which is about

13% of the entire regional assessment base.

Exhibit 13: Assessed Value for Properties within 400m of Rapid Transit Station, 2019 ($millions)

Total Assessed

Land Value

Total Assessed Improvements

Value Total

Assessed Value

Properties within 400m of an Existing Rapid Transit Station:

Class 1: Residential within 400m $57,944.7 $20,686.2 $78,631.0

Class 6: Business/Other $56,071.4 $23,321.4 $79,392.7

Rest of Classes Combined $7,505.8 $2,010.9 $9,516.7

Total $121,521.9 $46,018.5 $167,540.4

Total All Properties in Metro Vancouver:

Class 1: Residential $792,242.2 $199,359.4 $991,601.5

Class 6: Business/Other $158,445.0 $43,646.8 $202,091.7

Rest of Classes Combined $107,554.3 $23,756.7 $131,311.0

Total $1,058,241.4 $266,762.9 $1,325,004.3

Source: Landcor Data Corporation.

Exhibit 14 shows the implications for property taxation on residential and business properties in this sample

benefitting area.

Exhibit 14: Testing Benefitting Area Tax Revenue Potential ($millions)

Property Type

Total 2019 Assessed

Value Within 400 m of all

existing rapid transit stations

2019 TransLink mill rates

(per thousand dollars of assessed

value)

2019 Property

Taxes

Extra property tax to achieve $25

million increase assuming same

mix of residential and business

taxes

Percent increase in TransLink

property tax in benefitting area

Increase in total

property tax if TransLink

averages 7% of total

Residential $78,631.0 $0.2193 $17.2 $5.5 32% 2.2%

Business/Other $79,392.7 $0.7617 $60.5 $19.5 32% 2.2%

Other Classes $9,516.7 n/a n/a n/a n/a n/a

Total $167,540.4 n/a $77.7 $25 32% 2.2%

Achieving the revenue threshold requires a 32% increase in TransLink property taxes inside the defined

benefitting area. TransLink estimates that on average TransLink accounts for 7% of a homeowner’s total


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property tax bill19, so a 32% increase in the TransLink portion means an increase of a little over 2% in total

taxes (in addition to any increase applied to all properties) inside the benefitting area.20

This percentage increase could be reduced by:

• Including the rapid transit station areas on the new extensions in Surrey and Vancouver in the definition

of benefitting areas.

• Including properties in Frequent Transit Development Areas served by buses in the definition of

benefitting areas.

Sustainability of the Revenue Stream

This is a sustainable revenue stream that could increase over time because an increasing share of total

regional development is occurring in transit-served locations. This revenue stream would be affected by

changes in land value if the tax is set at a flat rate. The revenue stream would be resilient to changes in land

value if the tax rate is determined by a budget that defines the target revenue from this source.

Potential Impacts

This new tax would possibly constrain the ability of local governments to increase their property taxes,

assuming there is a financially and politically acceptable maximum total property tax that property owners will

absorb.

There would be impacts on these groups:

• Commercial tenants on fixed term leases will have to absorb the increased operating cost.

• Residential tenants paying less than full market rent may absorb increased costs if the Residential

Tenancy Act rent controls allow higher rent increases to cover the higher operating costs.

• Home owners will absorb an increased cost.

• Landlords who cannot pass the tax forward to tenants will have reduced net operating income.

• Businesses that own their own property will absorb increased operating cost.

These groups also benefit from the transit, so the property tax is recouping some of that benefit.

Ease of Implementation

The authority to create a benefitting area tax already exists in the SCBCTA Act.



While there is no legislation governing the use of CAC revenues, the common practice is to apply them to

capital investment needed to meet the needs of growth. Legislation requires that benefits from density

bonusing be used for amenities or affordable housing, but there is considerable flexibility in the allocation of

benefits to capital projects. TransLink could apply CAC or density bonus shared revenues to new transit

capital investment and infrastructure that supports walking, cycling, and transit use, but TransLink has

indicated that it would be unlikely to apply these revenues to affordable housing because local governments

19 TransLink website at https://www.translink.ca/About-Us/Media/2018/March/Phase-Two-Regional-Funding.aspx 20 This assumes that on average TransLink also accounts for 7% of commercial total property tax bills.

https://www.translink.ca/About-Us/Media/2018/March/Phase-Two-Regional-Funding.aspx


PAGE 61

already collect CACs for this purpose and there is no precedent for TransLink to do so. TransLink would likely

encounter resistance to applying CAC revenue to pay down debt for past investments or to fund transit

operating cost.

Potential Revenue

This is very difficult to estimate because not all municipalities report their CAC receipts and because some

public benefits are received in kind, which require a conversion to estimate cash equivalence.

Using available reported data for Vancouver, Surrey, Coquitlam, Burnaby, Richmond, West Vancouver, and

the District of North Vancouver, total contributions from development (not including DCCs and DCLs) in 2017

and 2018 were in the range of $660 to $690 million (heavily concentrated in Vancouver, Burnaby, and Surrey).

The totals were much lower during 2014 to 2016, averaging about $350 million to $400 million. These

municipalities account for a large share of total residential development in Metro Vancouver21, but the rest of

the municipalities in Metro Vancouver also obtain developer contributions.

These revenues fluctuate considerably depending on the amount of rezoning activity, market conditions, and

municipal policy.

To illustrate TransLink’s revenue potential, the first step is to establish a conservative forecast of total CAC

and density bonus revenues in Metro Vancouver, at an average say $500 million per year. To achieve $25

million, TransLink’s share would be 5%. However, while most revenues come from increased density in

transit-oriented locations (where municipalities might be open to the argument that transit contributes to the

increased land value that enables benefits from rezoning), there are projects that contribute public benefits

but receive little direct value from transit.

If, for illustrative purposes, it is assumed that municipalities might share CAC and density bonus revenues in

defined “benefitting areas” served by rapid transit and if such areas account for say 60% of all benefits

(assuming benefits are mostly obtained from strata multi-family residential projects and that about 60% of

new strata residential development is within 800 metres of a rapid transit station as illustrated in Exhibit 5),

then to achieve $25 million per year TransLink would have to obtain about 8% of the eligible revenue. This is

not unreasonable given that transit service supports densification and appears to contribute significantly more

(based on the case study analysis in Section 5.3) than 8% of the land value gains because of the premium

paid for strata residential space in transit-served locations.

The above estimates assume that TransLink explores sharing existing density bonusing and CACs. An

alternative way to structure a system could involve a new CAC or density bonus for transit infrastructure

levied on approved new density in defined areas. There is no existing legislation to enable such a system,

but in theory a system could be designed in which TransLink receives an amount per square foot of new

approved density in defined areas. For example, if apartment development averages about 11,000 units per

year in the region22, if about 70% of these are strata projects23 (i.e. not market rental or affordable rental as it

is rare for these types of projects to pay a CAC), and if about 60% of these are located in defined benefitting

areas near rapid transit stations, this works out to an average of about 4,620 new strata apartment units per

year. At an average apartment unit size of 850 square feet, this is about 3,927,000 square feet of strata

apartment development. If it is assumed that 50% of this development uses new density approved by

21 For example, Vancouver, Surrey, Coquitlam, Burnaby, Richmond, West Vancouver, and the District of North Vancouver accounted for 77% of total apartment starts in the region in 2017 and 2018 combined based on CMHC housing starts data.

22 Coriolis Consulting Corp., “Regional DCC for Transit Infrastructure: Structure, Rates, and Revenue Forecasts.” 1 August 2018. 23 In the June 2016 “Regional Housing Affordability Strategy” by Metro Vancouver, it forecast that about 70% of anticipated housing

demand in the region between 2016 and 2026 would be market condo units versus market rental/affordable rental units.


PAGE 62

rezoning, then to achieve $25 million a new CAC for transit infrastructure would need to be on the order of

$13 per square foot. This figure is a small share of CACs charged in high land value communities, but a large

figure compared to the CACs achievable in low land value communities in Metro Vancouver.

Note that the above estimates of revenue are illustrative of how TransLink might achieve a revenue target of

$25 million per year. These estimates understate the share of land value gains that are due to transit

investment compared to the gains that are due to rezoning.


CAC and density bonus revenue is a function of the pace of development, the value of new density, and

municipal policy about development contributions so changes in any of these will impact the revenue stream.

While CAC revenues across Metro Vancouver will fluctuate from year to year, over the long-term

redevelopment and densification will continue to create the potential for developer contributions from density

bonusing and rezonings. The Province may explore changes to CAC and density bonus structures, in

response to input from the development industry and local government, but some system of obtaining

development contributions in exchange for new density is likely to continue.

Potential Impacts

CACs and density bonusing can have these impacts:

• If these systems extract 100% of the land lift from rezoning, there is a risk that there is insufficient

incentive for land owners to sell property into the redevelopment market. This is why most systems aim

to obtain a portion of the value of new density.

• These systems mean that land owners or developers do not receive all of the upside from rezoning. This

could be regarded as an impact, but as long as there is sufficient movement of land into redevelopment,

and sufficient developer interest in additional density, then there are not negative impacts on the housing

market. In fact, if public benefits help make redevelopment more acceptable in the community and if some

of the benefits take the form of affordable housing then CACs help make the housing situation better.

• In some cases, the implementation of CACs creates delay, costs, and uncertainty.

TransLink involvement in CACs and density bonusing could have these effects:

• Any revenue received by TransLink could otherwise have gone to local government. For this reason,

local governments may not agree that revenue sharing is in their interests.

• If TransLink involvement is perceived as making the system more complicated or time-consuming, it will

be resisted by the development industry.

• If TransLink involvement significantly increases total expectations for CACs, then it could reduce the

incentives for land owners and developers to be involved in the rezoning process, leading to reduced

pace of development and rising house prices.

TransLink would have to proceed cautiously to avoid resistance and negative consequences.


There are several different ways in which CAC and density bonus revenue sharing could be implemented:

• Individual negotiations with municipalities, leading to agreement on sharing the proceeds from CACs and

density bonusing. There are precedents in the region for this approach, such as the CAC that the City of

Richmond implemented to raise funds for the Capstan Way station on the Canada Line. There are two

different ways that such agreements could be structured: local governments could commit to allocate a

share of their CACs to transit projects (i.e. the funds would not flow to TransLink but would be invested


PAGE 63

in agreed-on transit projects), or local governments could remit to TransLink an agreed-on share of

revenues.

• A flat rate applied to new density across the region (which could be applied in density bonus bylaws, fixed

rate CAC districts, or site-by-site negotiations). This would require either new provincial legislation or a

multi-party agreement between TransLink and the local governments in Metro Vancouver.

• Negotiation with individual municipalities that are receiving new capital investment in transit. These

negotiations could be part of the Project Partnership Agreements.

In the absence of Provincial legislation to create a region-wide approach, negotiations will have to proceed

individually with all municipalities, as every municipality has its own CAC and/or density bonus system and

its own market conditions. Municipalities that are not receiving significant transit investment may not see any

reason to even consider the idea.

It may be that the best approach is to include CAC or density bonus revenue sharing as a business term in each

local government with which TransLink negotiates Project Partnership Agreements24 related to a large transit

capital project.

In further exploration of this source of funding, TransLink will have to proceed carefully and work closely with

local governments given their stated concerns about the impacts of losing a share of their existing revenue

streams.



Obtaining a share of property transfer taxes would generate new revenue for TransLink that could be applied

to new transportation capital investment, infrastructure that supports walking, cycling, and transit use, and to

transit operations. TransLink could also apply these revenues to other objectives (e.g. affordable housing) or

a combination, but TransLink advised that it is unlikely to apply property transfer tax revenues to affordable

housing as it does not do so with its existing tax revenues.

As a tax, it would not directly provide housing or shape the form of urban development.

Potential Revenue

The potential revenue associated with any property transfer tax that is shared by the Province with the region

of which TransLink may receive a portion depends on (a) negotiations with the Province and (b) the split between

TransLink, Metro Vancouver, and municipalities.

As an illustrative example, in 2017 Metro Vancouver estimated that this region generated over 75% of the

Provincial revenue from this tax (which generates on the order of $2 billion per year).25 To yield $25 million

per year, TransLink would need a 1.7% share of property transfer tax revenues generated in the region (i.e.

$2 billion x 75% = $1.5 billion; $25 million ÷ $1.5 billion = 1.6%).


The revenue stream would be sustainable if negotiations with the Province were successful, although the

amount of revenue will be affected by the volume of sales transactions and changes in property values.

24 Project Partnership Agreements include two separate agreements: a non-binding Supportive Policy Agreement and a binding Financial Contribution Agreement.

25 Metro Vancouver, “Provincial Property-based Taxes in the Metro Vancouver Region.” 4 April 2017.


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Potential Impacts

It is possible that if the Province agreed to give the region (including TransLink) a share of property transfer

taxes generated in Metro Vancouver that it might reduce other funding it provides directly to TransLink.


This source of revenue will be entirely dependent on negotiation. It depends on if the Province is willing to

share this revenue stream and, if the Province does give a share to the region (including TransLink), the

portion that would be received by TransLink.

8.3.4 Strategic Acquisition and Disposition of Land


Participation in the land market can generate revenue for transit capital investment, transit operations, and

financial contributions to other objectives including affordable housing and infrastructure and programs that

promote walking, cycling, and transit ridership.

Revenue would come from the sale or lease of development parcels or air rights. Objectives for affordable

housing or promoting walking, cycling, and transit ridership could be achieved by means such as:

• Being in control of rezoning applications before taking sites to the market. The approved rezonings could

include obligations for affordable housing or design elements that support walking, cycling, and transit

ridership.

• Including requirements in purchase and sale agreements or leases for development sites or air rights

parcels.

Disposition of development property creates opportunities to make land available on terms that call for

including affordable housing and for design that is supportive of transportation objectives.

Potential Revenue

The revenue potential depends on the value of surplus property that TransLink can make available for

disposition including current surplus property and lands that are acquired for strategic purposes and then

subsequently marketed after taking advantage of market growth, transit access, and upzoning.

The inflow of revenue will probably not be regular, as a single sale of a large property (such as the former

Oakridge Transit Centre site), produces a large spike in revenue. This revenue should likely be thought of in

10-year cycles rather than regular annual amounts.

It is possible to illustrate the scale of activity needed to produce an average of $25 million per year, by making

some assumptions:

• Assume an overall average current land value for high density residential and commercial development

property in the region of $150 per square foot buildable.26

• Assume that on average TransLink’s added value (after original purchase price, market growth, transit

access, and retained share of land lift from rezoning, after CAC) works out to about one third of the

disposition value or $50 per square foot buildable.

26 Based on Coriolis Consulting’s experience and internal databases, current land values range from about $50 per square foot buildable to $400+ per square foot buildable throughout the region.


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• To achieve a gain of $25 million per year, TransLink would have to put 500,000 square feet of new

residential and office development capacity into the market every year. At an overall average density of

say 4.0 FSR, this means 125,000 square feet of land (just under 3 acres).

TransLink is not likely to be able to produce a steady flow of 3 acres every year to the development market,

but looked at as a 20 year target this means about 60 acres. Considering the lands (and possible air rights

over transit stations) TransLink already owns that could be declared surplus and the long-term outlook for

future transit construction this does not seem beyond reach.

Note that the above estimate is based only on potential acquisition and disposition of property and does not

assume any direct participation by TransLink as a partner in development projects. This land

acquisition/disposition revenue stream is generated by marketing surplus lands (after adding value through

rezoning) and by early strategic acquisition of property (for example, when buying land for transit construction)

that can be rezoned and marketed to developers after transit work is completed.

It is also important to note that decisions to incorporate affordable housing or to incorporate physical elements

that support walking, cycling, and transit ridership may result in TransLink receiving less revenue (for transit

investment) from the disposition of development properties.


This revenue is not sustainable if TransLink only takes to the market land it already owns that is surplus. This

will be a dwindling supply that will eventually be depleted.

For this to be a sustainable source of revenue, TransLink will have to be active in acquiring new land in

strategic locations in order to create the future inventory of value-added development sites that can be leased

or sold. The amount of revenue will depend on the amount and location of property acquisition and changes

in land values in these areas.

Potential Impacts

There are no significant negative impacts from the strategic acquisition and disposition of land.


TransLink already has the authority to acquire and dispose of land. To take a more active approach, TransLink

will need a mandate to acquire more land, a pool of capital to enable it to buy property, and the financial and

technical resources to make sound acquisitions and navigate approvals and dispositions.



Participation in development projects can generate revenue for transit capital investment, transit operations,

and financial contributions to other objectives including affordable housing and infrastructure and programs

that promote walking, cycling, and transit ridership.

Direct involvement in development also creates opportunities to include affordable housing and control the

form and character of development so that it is supportive of walking, cycling, and transit ridership.


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Potential Revenue

The revenue potential obviously depends on how active TransLink becomes in development, in terms of the

number and type of projects and its role. To illustrate the scale of potential revenue, some assumptions are

needed:

• Assume that TransLink wants to be a partner in development projects and wants to limit its financial

involvement to injecting land only (i.e. no cash or borrowing).

• Assume that on average the value of new market development product (strata residential, market rental,

office, retail) across Metro Vancouver is around $800 per square foot.

• Assume an average profit margin of 12% of project value, or $96 per square foot.

• Assume that TransLink only invests land value as its share of equity and this works out on average to a

25% interest in projects, or $24 per square foot of profit to TransLink.

• To make $25 million per year, TransLink would have to partner in a little over 1 million square feet of

product per year (equivalent to say 800 housing units plus a couple of large office buildings).

Note that this revenue is different from (and in addition to) the revenue from land acquisition/disposition that

was estimated in the previous section. This new revenue calculation is an estimate of the share of profit that

TransLink would make from being a partner in development projects, based on the stated assumptions.

One million square feet per year is a large amount of development activity, which may not be achievable if

TransLink concentrates only on projects at transit stations.

Because this is a large amount of development activity, it could make sense to think in terms of a revenue

target of $25 million per year as a sum of the revenue to be generated by a combination of strategic land

acquisition/disposition and direct participation in urban development projects.

An alternative way to generate revenue from development is to create income-producing property that yields

ongoing income from rents.

Investments in income-producing property in Metro Vancouver tend to generate returns (using Internal Rate

of Return as the metric) of around 6% before financing. Somewhat simplistically, if TransLink borrows 75%

of project cost at 3%, then it should be able to make around 15% on equity (which might be in the form of

land). The total capital investment to yield $25 million per year at a return of 15% on equity (assuming 75%

is financed) is about $670 million. If the all-in cost to create such investments (including land and all

construction costs) averages around $700 per square foot, this represents a total portfolio of about 960,000

square feet of space. This is not a large portfolio; it could be achieved with a mix of say 50,000 square feet

of retail, an office building of 150,000 square feet, and 800 units of market rental housing. If developed over

10 years or so, the average annual rate of development is modest.


This revenue stream can continue as long as TransLink finds sufficient good development opportunities with

acceptable risk.

Potential Impacts

There are no negative impacts on other parties. The development industry would probably welcome

TransLink as a partner, particularly if it is bringing forward a regular stream of potential development sites.

Because of the risks involved in development, it is possible that projects lose money. Consequently, the

greatest potential impact is on TransLink itself if development activity causes losses that must be covered

using revenue that had been earmarked for transit capital investment or operations.


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TransLink already has the legal authority to acquire, hold, develop, and sell/lease land. To earn revenue from

development, TransLink needs the financial and professional resources to find opportunities, negotiate with

partners, structure deals, and implement projects.

8.4 Potential Uses of New Revenue

Some of the potential new sources of revenue would allow TransLink considerable flexibility in applying the

funds to different purposes, except for CAC sharing which would likely be confined to new investment in

transit capital (in part because local governments are unlikely to be willing to share revenue unless there is a

commitment to use it for transit expansion).

Exhibit 15 indicates possible uses of each of the sources that are suggested for further consideration. The

most flexibility is with revenue from the strategic acquisition/disposition of land and revenue from participating

in development projects.

Exhibit 15: Possible Use of Revenue from Each Approach

Benefitting Area Tax

CAC or Density Bonus Revenue Sharing

Agreements with Local Governments

Property Transfer Tax

Revenue from Strategic Acquisition &

Disposition of Land

Revenue from Development

Projects

Capital investment in new transit (including upgrades)

Yes Yes Yes Yes Yes

Repayment of existing debt from previous projects

Yes No Yes Yes Yes

Transit operations Yes No Yes Yes Yes

Property acquisition Yes No Yes Yes Yes

Equity for development projects

Yes No Yes Yes Yes

Affordable housing (direct investment or contribution)

Not likely; affordable housing is not TransLink’s primary mandate, so there would likely be resistance to a transit agency increasing taxes to pay for affordable housing

No; local governments are likely only willing to considering CAC or density bonus revenue sharing if funds are used for transit investment (that supports the densification and land value gains that create the potential for CACs)

Not likely; TransLink advised that it is unlikely to apply property transfer tax revenues to affordable housing as it does not do so with its existing property tax revenues

Yes. Possible approaches include:

• Requiring lands sold or leased to include affordable housing, which will reduce the land value and is therefore a form of allocating revenue to affordable housing

• Investing the proceeds from sales and leasing into affordable housing, either directly or by working with others on initiatives such as the TOAH fund proposed by Metro Vancouver

Yes. Possible approaches include:

• Direct incorporation of affordable housing in any projects developed by TransLink

• Investing some of the profit from development into affordable housing, either directly or by working with others on initiatives such as the TOAH fund proposed by Metro Vancouver

Infrastructure to support walking, cycling, or transit ridership

Yes Yes, if directly linked to transit capital investment

Yes Yes Yes


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8.5 Policy Questions to be Addressed

There are two over-arching policy questions that TransLink must address if it wants to increase its use of land

value capture:

• Which approaches to explore further? The consulting team has recommended five approaches for further

consideration, but there are clear differences of opinion among the stakeholders regarding some of these

approaches.

• How to allocate the revenues? TransLink’s main mandate is the creation and operation of the regional

transit system, so presumably most new revenue will be allocated to this purpose. However, there is

strong support from some stakeholders for TransLink to become more involved in supporting the creation

of affordable transit-oriented rental housing, so TransLink will have to decide on the allocation of revenue

to transit construction, transit operation, support for affordable housing, and support for initiatives that

encourage walking, cycling, and transit ridership.

In addition to these fundamental questions, each of the five approaches recommended for further exploration

also raise significant policy questions that should be addressed, as listed in the following sections.


1. Should benefitting areas include areas around existing transportation infrastructure or only around new

investments?

2. Should benefitting areas be established for all transportation investments by TransLink or only some (e.g.

all transit investment or only rapid transit investment)?

3. Should benefitting areas all pay the same tax surcharge or should the charge vary by area?

4. Should the tax inside benefitting areas be the same for land and improvements?27

5. Should the definition of benefitting areas allow for gradations (e.g. one rate within 400 metres of a station

and another rate for 400 metres to 800 metres), to avoid sharp differences that might cause development

to avoid taxation areas?

6. What is the appropriate surcharge in benefitting areas?

7. Should there be any exemptions from a benefitting area tax?


1. Should this idea be explored with all Metro Vancouver local governments or only those where a significant

new transit capital investment is being made?

2. Is a region-wide approach workable or will this be a series of individual arrangements with individual local

governments? In either situation, what types of areas would be subject to a CAC or density bonus for

transit infrastructure?

27 In Part 3, Section 25(7), the SCBCTAA states that TransLink may “(a) establish zones in the transportation service region, and (b) adopt different tax rates for land and improvements in different zones based on the benefit that the authority considers accrues to the land and improvements in a zone as a result of proximity to a transportation station, or to another major transportation facility, that has been constructed or funded by the authority.” This might mean that tax rates can vary by area or that rates can vary between land and improvements in benefitting areas; this would need to be explored further to confirm the legal interpretation.


PAGE 69

3. Should a CAC or density bonus for transit infrastructure be based on a percentage of municipal CACs or

a target flat rate?


1. What is the appropriate role for TransLink in pursuing the idea of sharing property transfer tax revenues?

8.5.4 Strategic Acquisition and Disposition of Land

1. How broad should the mandate for property acquisition be? Should activity be focused at transit

locations? How should policy decisions be made to enable timely or expedited transactions?

2. When is the optimal time to make new property investments, relative to the timing of planning future

transit investments? Once TransLink signals the location and timing of new projects, some of the

advantage of early land acquisition is lost. On the other hand, buying land well ahead of project definition

may risk criticism that TransLink has not been transparent in its transit planning process and risks buying

land in “wrong” locations.

3. When taking surplus land to the market, how much emphasis should be on revenue generation versus

contributing to transit-oriented affordable rental housing?

4. Given that many transit stations are on land owned by others (e.g. BC Hydro, Province of BC), should

TransLink partner with these owners to create development opportunities?


1. What kinds of projects and locations offer the appropriate mix of revenue potential and tolerable risk?

2. Should TransLink be involved in strata residential for profit, or focus on transit-oriented rental residential?

3. Should TransLink take on projects on its own, or only in partnership with experienced developers? In

partnerships, what percentage interest should TransLink take (e.g. the percentage interest equal to land

value, or contribute land and equity to have a 50% interest)?


PAGE 70

9.0 Recommendations

1. Explore several of the potential tools in more detail, rather than select a single preferred approach at this

time. A combination of approaches has greater revenue potential and will allow progress on all of

TransLink’s stated objectives. Also, because there is stakeholder concern about some of the potential

approaches so they may not be implementable in the near term, TransLink should keep exploring several

options.

2. Explore in greater detail the creation of a transit benefitting area tax, as allowed under Part 3, Section

25(7) of the SCBCTA Act. This work should include determining whether any legislative amendments or

regulations would be needed to implement this tax. In the analysis of alternative ways to structure this

tax, TransLink should consider scenarios that only include areas around new rapid transit stations,

scenarios that include areas around existing and proposed rapid transit stations, and scenarios that

include Frequent Transit Development Area geographies and corridors. Scenarios should also include

different definitions of benefitting area (e.g. within 400 metres and 800 metres of a rapid transit station).

This analysis should include careful evaluation of potential negative impacts and ways to mitigate them.

3. Explore the idea of sharing CAC and density bonus revenues in locations that are transit-served and are

designated for significant increases in density based on transit investment. CAC and density bonus

sharing is the approach with the most direct link between transit investment and the creation of new land

value. While there was broad municipal opposition to the idea of CAC revenue sharing, TransLink should

emphasize the point that transit investment creates the potential for densification and generates a

significant share of the increase in land value associated with rezoning to higher density, so it should be

considered as a potential source of revenue for transit. There are several scenarios that could be

considered including:

a. Individual negotiations with all local governments in Metro Vancouver that have existing or proposed

major investments in transit, regarding sharing CAC and density bonus revenues.

b. Negotiations only with local governments that will receive major new transit investments, as one of

the terms in Project Partnership Agreements, particularly any Financial Contribution Agreements.

c. Discussion with the Province about a TransLink-specific flat rate CAC or density bonus rate to be

applied to rezonings around major transit investments.

Because many municipalities have already expressed opposition to CAC revenue sharing, if TransLink

elects to explore this approach in more detail it should adopt a highly collaborative approach and first

focus mainly on (b) and (c) above.

4. Develop a strategic plan for greater involvement in the acquisition and disposition of development sites.

This strategic plan should include:

a. Detailed evaluation of the existing inventory of TransLink-owned property to identify sites or portions

of sites that are surplus and could be available for urban development.

b. Detailed examination of all rapid transit stations to identify potential for air rights development. As

many stations are on lands owned by parties other than TransLink (e.g. BC Hydro, Province of BC),

this would require partnering with the owners.

c. Advance acquisition of land in strategic locations when acquiring land for new stations, particularly in

areas likely to be designated for increased density and where assembly creates the potential for

creating attractive development sites.


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5. Develop a strategic plan for participating in urban development projects as a new source of revenue,

including profit from projects developed for sale and net operating income from creating a portfolio of

income-producing rental residential, retail, and office properties.

6. Because of the ridership benefits from rental housing at transit stations, and because of the pressing

need for transit-oriented rental housing in the region, TransLink should consider using land

acquisition/disposition and participation in development as means to achieve revenues that can be

applied to a mix of transit capital investment, transit operations, and affordable housing. Land

acquisition/disposition and participation in urban development also provide the physical opportunity to

support walking, cycling, and transit infrastructure and affordable housing. Because there are varied

expectations within the region about the extent that TransLink should be involved in the creation of

affordable rental housing, TransLink should establish and communicate clear objectives regarding its role

(if any) in supporting, funding, or creating affordable rental housing. If TransLink decides to have a

significant role, it should develop a business case for its potential involvement in this area.

7. Participate with Metro Vancouver and local governments in efforts to influence the Province regarding

property transfer tax revenue sharing, but do not rely on this as a near term source of revenue for transit

investment.

8. Monitor the positions of the Provincial Government, Metro Vancouver, and municipalities in the region

regarding a broader approach to land value tax and then be part of the conversation as a stakeholder

when appropriate.


PAGE 72

Appendix 1: Case Studies


PAGE 73

Case Studies

A.1 Approach

The comparison of land value created through rezoning with the land value created by transit investment (i.e.

improved transit access) is analyzed using case studies.

For each case study, financial models were constructed for the following scenarios:

• “Base case” financial performance of a development site assuming no rezoning and no transit influence.

This either reflects value under existing zoning or under existing use, depending on the case study.

• “Rezoning only”, which shows the financial performance of rezoning the development site to a density

typical for the sub-market, in the absence of a price premium for rapid transit proximity.

• “Rezoning with transit”, which shows the financial performance of rezoning the development to a density

typical for the sub-market and incorporating a premium (in sales prices or rent rates) for improved transit

access. Based on the analysis summarized earlier in this report, the case studies use a premium of 5%

for multi-family unit sales prices near enhanced rapid transit and a premium of 10% for office lease rates

near rapid transit.28

Municipal Community Amenity Contributions (CAC) policies are not included29 so the case studies illustrate

the total land lift, the portion of the total attributable to the rezoning (increased density), and the portion

attributable to the transit premium prior to CACs.

A.2 Identification of Case Studies

A.2.1 Multi-Family Residential Case Studies

For the multi-family residential case studies, locations in different sub-markets in the region where rapid transit

expansions are planned or have recently been completed were selected including:

• The Broadway Corridor, where the new Broadway Subway Project will extend rapid transit from VCC-

Clark to Arbutus.

• Burquitlam, where the Evergreen Extension went into service in December 2016.

• Fleetwood, located on the planned extension to Langley.

• Lynn Creek, which will be served by the Marine Drive RapidBus that will connect West Vancouver with

Phibbs Exchange.

The case studies assume strata multi-family residential development to show the maximum extent to which

improved transit access generates land value relative to upzoning (because strata residential land values are

much higher than rental residential land values), except for one market rental scenario in the Broadway

28 Note that these premiums are based on analysis of sales prices and lease rates near vs not near rapid transit stations. One of the case studies is for multi-family residential redevelopment near new rapid bus service, so we use a lower premium (1%) on multi-family unit sales prices near a new rapid bus stop vs near a new rapid transit station.

29 Including the City of Vancouver’s Developer Contribution Expectation (DCE) in the Broadway Corridor.


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Corridor (where market rents are high enough to support a significant land value) to illustrate the economics

of redevelopment under both strata and rental residential.

A.2.2 Commercial Case Studies

For the commercial case studies, the analysis uses a higher land value and a lower land value location to

show the range in contribution of upzoning and improved transit access to land value increases in different

sub-markets with rapid transit access (or planned rapid transit access) in the region:

• The Broadway Corridor, where the new Broadway Subway Project will extend rapid transit from VCC-

Clark to Arbutus.

• Surrey City Centre, where the City of Surrey’s recently adopted new City Centre Plan envisions transit-

oriented redevelopment of low density properties near rapid transit stations including around King George

Station on the existing Expo Line.

Based on the analysis summarized in Section 5.2 of this report, the case studies use a transit premium of

10% for commercial lease rates near enhanced light rail rapid transit.

A.2.3 Summary List of Case Studies

Based on the foregoing, there are a total of 7 case studies:

1. Strata multi-family residential case study in the Broadway Corridor.

2. Market rental multi-family residential case study in the Broadway Corridor.

3. Strata multi-family residential case study in Burquitlam.

4. Strata multi-family residential case study in Fleetwood.

5. Strata multi-family residential case study in Lynn Creek.

6. Commercial case study in the Broadway Corridor.

7. Commercial case study in Surrey City Centre.

Detailed descriptions of each case study are provided in the following section.

A.3 Data Sources

Coriolis Consulting Corp. built the financial models used in the case study analysis and populated the models

with all assumptions. The major assumptions and inputs are based on the following data sources and

professional judgement:30

• Assumed densities are based on applicable municipal zoning bylaws and planning documents (OCPs).

• Residential sales prices are based sales data obtained from the Real Estate Board of Greater

Vancouver’s online subscription database (MLSLink) and residential sales from Urban Analytics’ online

subscription database (NHSLive).

30 Coriolis Consulting Corp. is a land economics, urban development, and land use planning consulting firm in Vancouver, BC. We have been in business for 37 years and have extensive experience analyzing the financial performance of development projects throughout the region.


PAGE 75

• Hard construction costs are based on published industry cost guides (e.g. Altus Group cost guide) and

our internal databases.

• Commercial rents are based on market evidence gathered from www.spacelist.ca, the websites of major

brokerage firms, and commercial market reports by major brokerage firms.

• Vacancy allowances and cap rates are based on our internal databases and commercial market reports

from major brokerage firms.

A.4 Detailed Descriptions of Case Studies

Case Study #1: Strata Multi-family Residential Redevelopment in the

Broadway Corridor

The Broadway Subway Project is planned to extend rapid transit from VCC-Clark to Arbutus. Construction on

this line is anticipated to commence in 2020 and be complete with the line in service by 2025. In March 2019,

the City of Vancouver launched the Broadway Plan process, which is intended to develop a 30-year plan to

guide redevelopment in the area in a way that integrates opportunities for new housing, jobs, and amenities

around new rapid transit stations on this line. Planning policy (e.g. height, density) for the Broadway Plan

Area is not yet known, but we looked at examples from other recent rezonings in the Broadway Corridor and

at new transit stations outside Downtown to select an assumed density for redevelopment.

Key assumptions in the financial analysis are as follows:

1. Site size of 18,750 square feet.

2. Income-producing value of the existing building of $7.8 million (see Attachment 1a) based on an

assumed existing older quality, single storey retail building 8,173 square feet (0.44 FSR), retail rents of

$40 per square foot net, a vacancy/non-recoverables allowance of 5%, and a cap rate of 4%.

3. A residual land value under the existing C-3A zoning of $22.8 million based on residual pro forma analysis

(see Attachment 1b), which estimates the sales proceeds from building and selling strata residential

space over retail space, less all costs to create the project (holding aside land), less a developer’s profit

of 15% on costs. The pro forma analysis assumes:

a) Maximum density of 3.0 FSR (plus up to a 10% bonus with heritage transfer density) under the

existing C-3A zoning.

b) Concrete strata residential unit sales prices of $1,450 per square foot.

c) A capitalized value of $1,190 per square foot for the retail space (based on net retail rents of $50 per

square foot, a 5% vacancy/non-recoverables allowance, and a 4% cap rate).

d) Hard construction costs of $443 per square foot (including $380 per square foot for concrete strata

residential, $260 per square foot for concrete retail, and $65,000 per underground parking stall), plus

allowances for all other typical creation costs (e.g. soft costs, contingency, municipal and regional

levies, development management fee, interim financing) for a total all-in creation cost of $619 per

square foot.

4. A residual land value of $45.4 million based on rezoning and redevelopment without enhanced transit

access (see Attachment 1c) to an assumed density of 6.0 FSR with strata residential above retail in a

high-rise concrete building. As noted above, planning policy is not yet in place to guide redevelopment in

this area. However, other rezonings in the Broadway Corridor and at new transit stations outside

http://www.spacelist.ca/


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Downtown have achieved densities typically in the range of 5.0 to 7.0 FSR so a density of 6.0 FSR was

used for the financial analysis. The pro forma analysis assumes:

a) An allowance for rezoning costs of $500,000.

b) Concrete strata residential unit sales prices of $1,475 per square foot (slightly higher than in the

redevelopment scenario under the existing zoning because the building is taller so the average sales

price is higher to reflect more view units).

c) A capitalized value of $1,190 per square foot for the retail space (based on net retail rents of $50 per






square foot.

e) No CAC payment (i.e. the City’s Developer Contribution Expectation or DCE in the Broadway

Corridor) because we hold this aside to calculate the total land lift before amenity contributions and

the relative portion of lift attributable to increased density versus enhanced transit accessibility.

5. A residual land value of $50.3 million based on rezoning and redevelopment with enhanced transit access

(see Attachment 1d) to an assumed density of 6.0 FSR with strata residential above retail in a high-rise

concrete building. The pro forma analysis includes all of the same assumptions as in point 4 above (and

as in Attachment 1c), except that concrete strata residential unit sales prices are assumed to be 5%

higher to reflect a premium associated with enhanced transit access (i.e. $1,549 per square foot instead

of $1,475 per square foot).

The results of the analysis for Case Study #1 are shown in the following tables. As shown, the potential

increase in sales prices of 5% for being close to a rapid transit station works out to about $4.9 million of the

total $27.5 million in land lift (holding aside the DCE that would be payable to the City of Vancouver)

associated with the rezoning and redevelopment project (i.e. about 18% of the total land lift).


PAGE 77

Summary of Financial Analysis for Case Study #1 (Multi-Family Residential Redevelopment - Strata, Broadway Corridor)

Case Study

Type of

Transit

Assumed density in

the rezoning


Transit Premium Land Value Under Rezoning Without Transit

Without transit

With transit

$ psf %a

$ psfb

Sales price premium as a % of value of extra

density

Case Study #1: C-3A Site in the Broadway Corridor (Strata Residential Redevelopment)

Rapid transit

6.0 FSR $1,475 $1,549 (5%

higher)

$74 5% $398 19% ($74 ÷ $398)

Case Study Existing Value Land Value After Rezoning,

without Transit Premium Land Value After Rezoning, with

Transit

Case Study #1 $22.8 million31 $45.4 million $50.3 million

Land lift from rezoning Land lift from transit

$22.6 million $4.9 million

(82%) (18%)

Case Study #2: Market Rental Multi-family Residential Redevelopment in the

Broadway Corridor

This case study uses the same site as in Case Study #1 but illustrates the economics of a market rental multi-

family project instead of a strata project. The key assumptions about site size, the income-producing value of

the existing building, and residual land value under the existing C-3A zoning are the same. The key

assumptions in the rezoning and redevelopment scenarios are as follows:


access (see Attachment 2a) to an assumed density of 6.0 FSR with market rental residential above retail

in a high-rise concrete building. The pro forma analysis assumes:


b) A capitalized value of about $890 per square foot for the market rental residential space (based on a

mix of studio, 1-bedroom, 2-bedroom, and 3-bedroom units and an overall average rent of $3.73 per

square foot, parking revenues of $100 per month per stall, storage rental revenues of $50 per month,

a 2% vacancy/non-recoverables allowance, and a 4% cap rate).

c) A capitalized value of about $1,190 per square foot for the retail space (based on net retail rents of

$50 per square foot, a 5% vacancy/non-recoverables allowance, and a 4% cap rate).

d) Hard construction costs of $400 per square foot (including $350 per square foot for concrete market

rental residential, $260 per square foot for concrete retail, and $65,000 per underground parking

stall), plus allowances for all other typical creation costs (e.g. soft costs, contingency, municipal and

regional levies, development management fee, interim financing) for a total all-in creation cost of

$560 per square foot.

31 The existing value is based on the residual land value assuming redevelopment under the existing C-3A zoning, which generates a higher value than the income-producing approach based on the existing building.


PAGE 78

e) No CAC payment (i.e. the City’s Developer Contribution Expectation or DCE in the Broadway

Corridor) because we hold this aside to calculate the total land lift before amenity contributions and

the relative portion of lift attributable to increased density versus enhanced transit accessibility.


(see Attachment 2b) to an assumed density of 6.0 FSR with market rental residential above retail in a

high-rise concrete building. The pro forma analysis includes all of the same assumptions as in point 4

above (and as in Attachment 2a), except that market rental rates by unit type are assumed to be 5%

higher to reflect a premium associated with enhanced transit access. This works out to an overall average

rent of $3.92 per square foot instead of $3.73 per square foot (i.e. 5% higher).

The results of the analysis for Case Study #2 are shown in the following tables. As shown, market rental

residential redevelopment is not financially viable in this case (i.e. the residual land value after rezoning

without a transit premium is lower than the residual land value under the existing zoning). While the assumed

transit premium on market rental rates helps improve the financial performance of redevelopment, it is still

not enough to make market rental residential financially viable. While not tested, the financial performance

of below-market rental residential redevelopment would generate even lower residual land value.

Summary of Financial Analysis for Case Study #2 (Multi-Family Residential Redevelopment - Market Rental, Broadway Corridor)

Case Study

Type of

Transit

Assumed density in

the rezoning

Average Market Rent Rates ($ psf)


Without transit

With transit

$ psf %a

$ psfb


density

Case Study #2: C-3A Site in the Broadway Corridor (Market Rental Redevelopment)

Rapid transit

6.0 FSR $3.73 $3.92 (5%

higher)

$74 5% $398 n/a (market rental not strata)

Case Study Existing Value Land Value After Rezoning,

without Transit Premium Land Value After Rezoning,

with Transit


Land lift from rezoning Land lift from transit no lift – redevelopment to market is not enough to make rental is not financially viable redevelopment financially viable

32 The existing value is based on the residual land value assuming redevelopment under the existing C-3A zoning, which generates a higher value than the income-producing approach based on the existing building.


PAGE 79

Case Study #3: Strata Multi-family Residential Redevelopment in Burquitlam

The Evergreen Extension went into service in December 2016 and the City of Coquitlam adopted a new

Burquitlam-Lougheed Neighbourhood Plan in June 2017 to shape and focus transit-oriented development

around the new SkyTrain stations in an integrated way with existing neighbourhoods, so planning policy

guides redevelopment in this transit-oriented node.




assumed existing older quality, single storey retail building 16,295 square feet (0.35 FSR), retail rents of

$30 per square foot net, a vacancy allowance of 5%, and a cap rate of 4.75%.

3. A residual land value under the existing C2 zoning of $3.9 million based on residual pro forma analysis

(see Attachment 3b), which estimates the sales proceeds from building and selling a mix of strata

residential, retail, and office space, less all costs to create the project (holding aside land), less a

developer’s profit of 15% on costs. The pro forma analysis assumes:

a) Maximum density of 1.05 FSR.

b) Wood-frame strata residential unit sales prices of $722 per square foot.

c) A capitalized value of $700 per square foot for the retail space (based on net retail rents of $35 per

square foot, a 5% vacancy/non-recoverables allowance, and a 4.75% cap rate).

d) A capitalized value of $600 per square foot for the office space (based on net office rents of $30 per


e) Hard construction costs of $327 per square foot (including $220 per square foot for wood-frame strata

residential, $250 per square foot for concrete retail, $250 per square foot for concrete office, and

$65,000 per underground parking stall), plus allowances for all other typical creation costs (e.g. soft

costs, contingency, municipal and regional levies, development management fee, interim financing)

for a total all-in creation cost of $442 per square foot.


access (see Attachment 3c) to an assumed density of 4.5 FSR (based on the City’s C-7 Transit Village

zoning district) with strata residential above retail in a high-rise concrete building. The pro forma analysis

assumes:


b) Concrete strata residential unit sales prices of $855 per square foot.







square foot.


(see Attachment 3d) to an assumed density of 4.5 FSR (based on the City’s C-7 Transit Village zoning

district) with strata residential above retail in a high-rise concrete building. The pro forma analysis includes


PAGE 80

all of the same assumptions as in point 4 above (and as in Attachment 3c), except that concrete strata

residential unit sales prices are assumed to be 5% higher to reflect a premium associated with enhanced

transit access (i.e. $900 per square foot instead of $855 per square foot).


increase in sales prices of 5% for being close to a rapid transit station works out to about $5.4 million of the

total $11.9 million in land lift associated with the rezoning and redevelopment project (i.e. about 46% of the

total land lift).

Summary of Financial Analysis for Case Study #3 (Multi-Family Residential Redevelopment, Burquitlam)

Case Study

Type of

Transit

Assumed density in

the rezoning



Without transit

With transit

$ psf %a

$ psfb


density

Case Study #3: C2 Site in Burquitlam (Strata Residential Redevelopment)

Rapid transit

4.5 FSR $855 $900 (5%

higher)

$45 5% $78 58% ($45 ÷ $78)

Case Study

Existing Value Land Value After Rezoning, without Transit Premium

Land Value After Rezoning, with Transit


Land lift from rezoning Land lift from transit $6.5 million $5.4 million (54%) (46%)

Case Study #4: Strata Multi-family Residential Redevelopment in Fleetwood

The Surrey Langley Line is planned to extend rapid transit from King George SkyTrain Station to Langley City

Centre. Planning and business case analysis for this line is currently underway, with funding in place for a

first phase to Fleetwood that is anticipated to be built during 2022 to 2025. The City of Surrey is currently

working on a Fleetwood Plan which will guide redevelopment in the area to encourage transit-oriented

development. While densities and height for transit-oriented redevelopment are not yet defined, we assumed

a density of 4.0 FAR in the rezoning and redevelopment scenarios to match the density that the City was

considering in areas such as Newton and Guildford that were previously planned to have LRT extensions.34



2. Income-producing value of the existing building of $3.1 million (see Attachment 4a) based on assumed

existing older quality, single storey retail buildings with 7,200 square feet (0.19 FSR), retail rents of $22.50

per square foot net, a vacancy allowance of 5%, and a cap rate of 5%.

33 The existing value is based on the income-producing value of the existing building, which is higher than the residual land value assuming redevelopment under the existing C2 zoning.

34 We also ran scenarios at 2.5 FAR to match the density envisioned in the existing OCP for this case study site, but redevelopment at 2.5 FAR (or less) does not support sufficient residual land value to make the site a redevelopment candidate (i.e. the income-producing value of the existing use is higher than the residual land value under redevelopment to 2.5 FAR).


PAGE 81

3. A residual land value under the existing CH1 zoning of $1.7 million based on residual pro forma analysis

(see Attachment 4b), which estimates the sales proceeds from building and selling a mixed retail/office

project, less all costs to create the project (holding aside land), less a developer’s profit of 15% on costs.

The pro forma analysis assumes:

a) Maximum density of 1.0 FSR.

b) An overall value of $525 per square foot buildable based on net retail rents of $30 per square foot,

net office rents of $27.50 per square foot, net parking revenues of $75 per stall per month, operating

costs of $15 per square foot for retail space, operating costs of $10 per square foot for office space,

a 2% vacancy/non-recoverables allowance, a 5% cap rate, and a sales commission of 2%.

c) Hard construction costs of $262 per square foot (including $250 per square foot for concrete retail,

$250 per square foot for concrete office, and $7,500 per at grade parking stall), plus allowances for

all other typical creation costs (e.g. soft costs, contingency, municipal and regional levies, interim

financing) for a total all-in creation cost of $408 per square foot.


access (see Attachment 4c) to an assumed density of 4.0 FSR (based on densities that the City of

Surrey was considering in areas such as Newton and Guildford that were previously being planned for

LRT extensions) with strata residential above retail in a high-rise concrete building. The pro forma

analysis assumes:


b) Concrete strata residential unit sales prices of $760 per square foot.







square foot.


(see Attachment 4d) to an assumed density of 4.0 FSR (based on densities that the City of Surrey was

considering in areas such as Newton and Guildford that were previously being planned for LRT

extensions) with strata residential above retail in a high-rise concrete building. The pro forma analysis

includes all of the same assumptions as in point 4 above (and as in Attachment 4c), except that concrete

strata residential unit sales prices are assumed to be 5% higher to reflect a premium associated with

enhanced transit access (i.e. $800 per square foot instead of $760 per square foot).

The results of the analysis for Case Study #4 are shown in the following tables. As shown, redevelopment is

not viable based on current market conditions and an assumed density of 4.0 FAR in the absence of rapid

transit expansion. In this case, the potential increase in sales prices of 5% for being close to a rapid transit

station means that the rezoning and redevelopment is viable (so all of the lift could be attributable to improved

transit access).


PAGE 82

Summary of Financial Analysis for Case Study #4 (Multi-Family Residential Redevelopment, Fleetwood)

Case Study

Type of

Transit

Assumed density in

the rezoning



Without transit

With transit

$ psf %a

$ psfb


density

Case Study #4: CHI Site in Fleetwood (Strata Residential Redevelopment)

Rapid transit

4.0 FSR $760 $800 (5%

higher)

$40 5% $6 over 100% ($40 ÷ $6)

Case Study




Land lift from rezoning Land lift from transit no lift – redevelopment is not makes redevelopment viable financially viable without transit

Case Study #5: Strata Multi-family Residential Redevelopment in Lynn Creek

Lynn Creek Town Centre is one of the neighbourhoods that will experience improved rapid bus transit from

the Marine Drive RapidBus which will connect West Vancouver with Phibbs Exchange. Construction of this

route is underway and expected to be complete in March 2020. The District of North Vancouver’s Lower Lynn

Town Centre planning policies encourage transit-oriented development around frequent transit bus service

in this neighbourhood. This case study assumes an assembly of 4 single family lots in the Lynn Creek Town

Centre. The analysis assumes a density of redevelopment of 2.5 FSR based on municipal policies for the

area.



2. Combined existing value of the four existing single family lots of $6.5 million (see Attachment 5a) based

on single family lot values and an assumed assembly premium of 20%.


access (see Attachment 5b) to an assumed density of 2.5 FSR based on densities for the Lynn Creek

Town Centre, with strata residential in a wood-frame building. The pro forma analysis assumes:


b) Wood-frame strata residential unit sales prices of $800 per square foot.

c) Hard construction costs of $301 per square foot (including $230 per square foot for wood-frame strata

residential and $55,000 per underground parking stall), plus allowances for all other typical creation

costs (e.g. soft costs, contingency, municipal and regional levies, development management fee,

interim financing) for a total all-in creation cost of $418 per square foot.

35 The existing value is based on the income-producing value of the existing buildings, which is higher than the residual land value assuming redevelopment under the existing CH1 zoning.


PAGE 83


(see Attachment 5c) to an assumed density of 2.5 FSR based on densities for the Lynn Creek Town

Centre, with strata residential in a wood-frame building. The pro forma analysis includes all of the same

assumptions as in point 4 above (and as in Attachment 5b), except that wood-frame strata residential

unit sales prices are assumed to be 1% higher to reflect a premium associated with enhanced bus rapid

transit access (i.e. $808 per square foot instead of $800 per square foot). We used a lower premium (1%

compared to 5%) for bus rapid transit compared to light rail rapid transit.


increase in sales prices of 1% for being close to a bus rapid transit station works out to about $0.4 million of

the total $4.7 million in land lift associated with the rezoning and redevelopment project (i.e. about 8% of the

total land lift).

Summary of Financial Analysis for Case Study #5 (Multi-Family Residential Redevelopment, Lynn Creek)

Case Study

Type of

Transit

Assumed density in

the rezoning



Without transit

With transit

$ psf %a

$ psfb


density

Case Study #5: Single Family Site in Lynn Creek (Strata Residential Redevelopment)

Bus rapid transit

2.5 FSR $800 $800 (1%

higher)

$8 1% $138 6% ($8 ÷ $138)

Case Study



Case Study #5 $6.5 million $10.8 million $11.2 million

Land lift from rezoning Land lift from transit $4.3 million $0.4 million (92%) (8%)

Case Study #6: Commercial Redevelopment in the Broadway Corridor

The Broadway Subway Project is planned to extend rapid transit from VCC-Clark to Arbutus. Construction on

this line is anticipated to commence in 2020 and be complete with the line in service by 2025. In March 2019,

the City of Vancouver launched the Broadway Plan process, which is intended to develop a 30-year plan to

guide redevelopment in the area in a way that integrates opportunities for new housing, jobs, and amenities

around new rapid transit stations on this line. We selected a case study site in the Uptown Office Precinct

(which applies to properties along Broadway between Cambie and Oak) and assumed a rezoning to 6.0 FSR

based on precedents in the Broadway Corridor and at other transit station locations in Vancouver outside of

Downtown.




assumed existing older quality, mixed use building with 9,310 square feet of retail space, 5,997 square

feet of office space, and 6 rental residential units; retail rents of $40 per square foot net, office rents of

$25 per square foot net, a vacancy/non-recoverables allowance of 5%, a cap rate of 4% for the retail


PAGE 84

space, a cap rate of 4.5% for the office space, a value of $550,000 per rental residential unit, and an

assumed acquisition premium of 10%.

3. A residual land value under the existing C-3A zoning of $6.8 million based on residual pro forma analysis

(see Attachment 6b), which estimates the sales proceeds from building and selling a mixed retail/office

project (assumes no residential as the site is in the Uptown Office Precinct), less all costs to create the

project (holding aside land), less a developer’s profit of 15% on costs. The pro forma analysis assumes:

a) Maximum density of 3.0 FSR (plus up to a 10% bonus with heritage transfer density) under the

existing C-3A zoning.


net office rents of $37 per square foot, net parking revenues of $150 per stall per month, operating

costs of $18 per square foot for retail and office space, a 5% vacancy/non-recoverables allowance,

a 4.25% cap rate, and a sales commission of 2%.

c) Hard construction costs of $402 per square foot (including $300 per square foot for concrete retail

and office space and $55,000 per underground parking stall), plus allowances for all other typical

creation costs (e.g. soft costs, contingency, municipal and regional levies, interim financing) for a

total all-in creation cost of $626 per square foot.


access (see Attachment 6c) to an assumed density of 6.0 FSR with office above retail based on

precedents in the Broadway Corridor and at other transit station locations in Vancouver outside of

Downtown. The pro forma analysis assumes:







and office space and $60,000 per underground parking stall which is slightly higher than in

Attachment 6b because the parking includes additional underground levels which is more expensive),

plus allowances for all other typical creation costs (e.g. soft costs, contingency, municipal and

regional levies, interim financing) for a total all-in creation cost of $628 per square foot.


(see Attachment 6d) to an assumed density of 6.0 FSR with office above retail based on precedents in

the Broadway Corridor and at other transit station locations in Vancouver outside of Downtown. The pro

forma analysis includes all of the same assumptions as in point 4 above (and as in Attachment 6c), except

that office lease rates are assumed to be 10% higher to reflect a premium associated with enhanced

rapid transit access (i.e. $40.70 per square foot net instead of $37 per square foot).

The results of the analysis for Case Study #6 are shown in the following table. As shown, redevelopment with

office above retail is not viable based on current market conditions and an assumed density of 6.0 FAR in the

absence of rapid transit expansion. In this case, the potential increase in office lease rates of 10% for being

close to a rapid transit station means that the rezoning and redevelopment is viable (so all of the lift could be

attributable to improved transit access).


PAGE 85

Summary of Financial Analysis for Case Study #6 (Commercial Redevelopment, Broadway Corridor)

Case Study

Type of

Transit

Assumed density in

the rezoning



Land Value After Rezoning, with

Transit Without transit

With transit

Case Study #6: C-3A Site, Broadway Corridor (Commercial Redevelopment)

Rapid transit

6.0 FSR $37.00 $40.70 (10%

higher)

$15.3 million36 $11.2 million $16.9 million

Land lift from rezoning Land lift from transit n/a (redevelopment makes redevelopment is not financially viable) financially viable

Case Study #7: Commercial Redevelopment in Surrey City Centre

The City of Surrey’s City Centre Plan envisions redevelopment of low density properties near rapid transit

stations with higher density redevelopment. We selected a site occupied by low density, older retail space at

grade that is currently zoned C-8 but designated for 3.5 FAR in the Surrey City Centre Plan (which was

adopted January 2017 in part to help encourage transit-oriented development). The 3.5 FAR could be used

for strata residential or office redevelopment, so we show the relative value of strata residential development

at this density for comparison.



2. Income-producing value of the existing buildings of $10.7 million (see Attachment 7a) based on assumed

existing older quality, retail buildings with a total of 15,731 square feet of retail space, retail rents of $32.50

per square foot net, a vacancy/non-recoverables allowance of 5%, a cap rate of 5%, and an assumed

acquisition premium of 10%.

3. A residual land value of $12.3 million (see Attachment 7b) based on strata multi-family residential

development above retail at an assumed density of 3.5 FSR. The pro forma analysis assumes:


b) Concrete strata residential sales prices of $798 per square foot.






levies, interim financing) for a total all-in creation cost of $476 per square foot.

36 The existing value is based on the income-producing value of the existing building, which is higher than the residual land value assuming commercial-only redevelopment under the existing C-3A zoning.


PAGE 86

4. A residual land value of -$5.0 million (i.e. not viable) based on rezoning and redevelopment with office

above retail without transit access (see Attachment 7c) to an assumed density of 3.5 FSR. The pro

forma analysis assumes:







and office space and $55,000 per underground parking stall), plus allowances for all other typical

creation costs (e.g. soft costs, contingency, municipal and regional levies, interim financing) for a

total all-in creation cost of $537 per square foot.

5. A residual land value of $6.6 million based on rezoning and redevelopment with transit access (see

Attachment 7d) to an assumed density of 3.5 FSR with office above retail. The pro forma analysis

includes all of the same assumptions as in point 4 above (and as in Attachment 7c), except that office

lease rates are assumed to be 10% higher to reflect a premium associated with enhanced rapid transit

access (i.e. $31 per square foot net instead of $28 per square foot).

The results of the analysis for Case Study #7 are shown in the following table. As shown, redevelopment with

office above retail is not viable based on current market conditions and an assumed density of 3.5 FAR. The

site is more valuable in its existing use or as a strata multi-family residential development site.

Summary of Financial Analysis for Case Study #7 (Commercial Redevelopment, Surrey City Centre)

Case Study

Type of

Transit

Assumed density in

the rezoning



Land Value After Rezoning, with

Transit Without transit

With transit

Case Study #7: Office Project in Surrey City Centre

Rapid transit

3.5 FSR $28 $31 (10%

higher)

$10.7 million based on existing use; $12.3 million

as strata residential

redevelopment site

-$5.0 million $6.6 million

Land lift from rezoning Land lift from transit n/a (office redevelopment n/a (office redevelopment is not financially viable) is still not financially viable)


PAGE 87

A.4 Summary of Case Studies and Implications for TransLink

The results of the case study analysis are summarized in the following table. The case studies suggest the

following main points:

• Rapid transit investment is responsible for a significant share of the gains in strata multi-family residential

land value in transit-oriented areas. The dollar value gain in land value varies considerably around the

region, but it appears that rapid transit investment can create 20% (or more) of the gain in land value

from a combination of upzoning and transit investment. The share of land value gain created by transit

investment is higher in areas with lower land values, reaching over 40% in some cases. This lends

support for engaging with municipalities about the possibility of CAC revenue sharing from strata multi-

family residential rezonings near rapid transit stations.

• Without the premium associated with rapid transit, office development is not financially viable in many

suburban locations in the region.

• With rapid transit, high density office development is financially viable in some locations, but the lift in

land value from rezoning and transit is marginal so the ability to charge a CAC is negligible (and

municipalities typically do not charge CACs on office development).

Roll Up Summary of Financial Analysis for Case Studies

Case Study

Type of

Transit

Existing value Land Value After

Rezoning, without Transit

Premium

Land Value After

Rezoning, with Transit

Land Lift

From rezoning

From transit

Total

#1: Strata multi-family project, Broadway Corridor

Rapid transit

$22.8 million $45.4 million $50.3 million $22.6 million (82%)

$4.9 million (18%)

$27.5 million

#2: Market rental residential project, Broadway Corridor

Rapid transit

$22.8 million $13.3 million $15.2 million not financially viable

not financially viable


#3: Strata multi-family project, Burquitlam

Rapid transit


$5.4 million (46%)

$11.9 million

#4: Strata multi-family project, Fleetwood

Rapid transit

$3.1 million $0.9 million $3.8 million not financially

viable

transit premium

makes project financially

viable

$0.7 million

#5: Strata multi-family project, Lynn Creek

Bus Rapid transit


$0.4 million (8%)

$4.7 million

#6: Office project, Broadway Corridor

Rapid transit

$15.3 million $11.2 million $16.9 million not financially viable

transit premium

makes project financially

viable

$1.6 million

#7: Office project, Surrey City Centre

Rapid transit

$10.7 million based on existing use;

$12.3 million as a strata residential

redevelopment site

-$5.0 million $6.6 million not financially viable




PAGE 88

A.5 Attachments (Pro Formas)


PAGE 89

Attachment 1a

Attachment 1a

Case Study #1: Site on West Broadway

Estimated Existing Value based on Income Potential

Major AssumptionsSite and Building Size

Site Size 18,750 sq.ft. or

Assumed Existing Density 0.44 FSR

Total Commercial Space 8,173 sq.ft.

Office 0 sq.ft. with 95% rentable

Retail 8,173 sq.ft. 100% rentable

Revenue and Value

Average Lease Rate for Office Space $20.00 per sq.ft. net, base building with no TI

Average Lease Rate for Retail Space $40.00 per sq.ft. net, base building

Vacancy and Non Recoverables 5.0%

Capitalization Rate 4.00%

Value of Office Space $500.00

Value of Retail and Service Space $1,000 per sq.ft. of leasable area

Estimated Overall Value

Capitalized Value of Office Space $0

Capitalized Value of Retail/Service Space $7,764,350

Total Value of Commercial $7,764,350


PAGE 90

Attachment 1b

(continues on following page)

Attachment 1b


Estimated Residual Land Value based on Existing C-3A Zoning (strata) (3.3 FSR)

Major Assumptions (shading indicates figures that are inputs; unshaded cells are formulas)

Site Size 18,750 sq.ft. which equals 0.43 acres

150 feet of frontage

Existing Base Density 3.00 FSR

Increased Density 1 0.30 FSR


Density with Bonuses 3.30 FSR

Assumed Commercial Density 0.50 FSR

Residential Density Before Exclusions 2.80 FSR

Enclosed Balconies 0.00 0% of residential

Storage 39.8 sf per unit

Effective Residential Density After Bonuses and Exclusions 2.80 FSR

Total Effective Gross Density After Bonuses and Exclusions 3.30 FSR

Total Gross Floorspace 61,875 sf

Concept Gross SF Efficiency

Net Saleable

or Rentable Avg Unit Size

Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls

Strata Residential 52,500 85% 44,625 783 57 1.1 63

Market Rental 0 85% 0 616 0 0.6 0

Below Market Rental 0 85% 0 664 0 0.6 0

Social Housing 0 85% 0 706 0 0.5 0

Retail 9,375 100% 9,375 n/a n/a 14

Office 0 95% 0 n/a n/a 0

Total 61,875 54,000 57 77

Revenue/Value

Strata Residential $1,450 per net square foot

Market Rental $0 per net square foot (see separate calculations)

Below Market Rental $0 per net square foot (see separate calculations)

Social Housing $0 per net square foot (see separate calculations)

Retail* $1,188 per net square foot including parking revenue (see separate calculations)

Office $0 per net square foot including parking revenue (see separate calculations)

Pre Construction Costs

Upfront Compensation to Existing Tenants $0

Tenant Relocation $0

Allowance for Demolition of Existing Buildings $163,460 or $20 per sq. ft. of existing building

Allowance for Remediation $0

Site Preparation/Fill $0

On and Off-Site Servicing $160,061 $3,500 per lineal metre of frontage

Density Bonus Contribution $86 psf of bonus density

Rezoning Costs $0

Construction Costs

Hard Construction Costs

Market Strata Residential Area $380 per gross sq.ft. of residential area

Market Rental Residential Area $350 per gross sq.ft. of rental residential area

Below Market Residential Area $350 per gross sq.ft. of rental residential area

Social Housing Residential Area $350 per gross sq.ft. of rental residential area

Retail Area (shell space - no TI) $260 per gross sq.ft. of retail area

Office Area (shell space - no TI) $260 per gross sq.ft. of commercial area

Cost Per Garage/Underground Parking Stall $65,000 per underground/structured parking stall

Overall Costs Per Square Foot $443 per gross sq.ft.

Sustainability Premium 0%

Total Estimated Cost per Square Foot $443

Hard Cost Used in Analysis $443

Site Landscaping $0 or $0 psf of site area on 50% of site

Public Art Contribution $0.00 per sq. ft.

Soft costs and Professional Fees 8.0% of hard costs, landscaping and site prep/servicing costs

Development management 3.0% of hard costs, landscaping and site prep/servicing costs and soft costs

Fees, legal and survey for rental portion $0

Contingency on hard and soft costs 5.0% of hard, soft and management costs

Government Levies

GVS & DD Sewer Levy - Strata Apartment $1,072 per apartment unit

GVS & DD Sewer Levy - Rental Residential $1,072 per unit

GVS & DD Sewer Levy - Commercial $0.93 per sq.ft. of commercial space

TransLink - Strata Apartment Residential $1,200 per market unit

TransLink - Rental Residential $1,200 per unit

TransLink - Commercial $1.25 per sq.ft. of commercial space

Market Strata Apartment DCLs $28.26 per sq.ft. of floorspace

Market Rental DCLs $28.26 per sq.ft. of floorspace

Below Market Rental DCLs $0.00 per sq.ft. of floorspace

Social Housing DCLs $0.00 per sq.ft. of floorspace

Retail DCLs $20.64 per sq.ft. of floorspace

Office DCLs $20.64 per sq.ft. of floorspace

School Site Acquisition Charge $0 per unit


PAGE 91

Attachment 1b – continued


Financing

Interim financing 5.0% assuming a 2.00 year construction period

Financing charged on 50% of land and 75% of construction costs

Financing fees 1.25%

Commissions and Marketing

Commissions on Strata Residential 3.0% of gross strata market residential revenue

Marketing on Strata Residential 2.0% of gross strata market residential revenue

Commissions on Sale of Commercial 2.0% of gross commercial value

Commission on Sale of Rental Units 2.0% of value

Initial Lease Up Costs on Market Rental Units $3,500 per unit

Initial Lease Up Costs on Below Market Rental Units $0 per unit

Initial Lease Up Costs on Social Housing Units $0 per unit

Leasing Commissions on Commercial Space $5.00 per sq.ft.

Tenant Improvement Allowance on Retail Space $0.00 per sq.ft.

Tenant Improvement Allowance on Office Space $0.00 per sq.ft.

Other Costs and Allowances

Net GST on Market Rental Units 5.00% of capitalized value of rental units

Net GST on Below Market Rental Units 0.00% of capitalized value of rental units

Net GST on Social Housing Units 0.00% of development cost of new units (assumes rebate)

Property Taxes 0.247% of assessed value

Assumed current assessment (Year 1 of analysis) $31,545,900

Assumed assessment after 1 year of construction (Year 2 of analysis) $37,919,531 (50% of completed project value)

Developer's Profit 15.0% of total costs or 13.0% of gross market revenue/value

School Tax Surcharge During Development*

Tax Rate 0.2% between $3.0-$4.0 million, and 0.4% over $4.0 million

Residential Portion of current assessment (Year 1 of analysis) $31,545,900

Assumed residential portion of assessment after 1 year of construction $32,353,125 (50% of completed residential project value)

*Assumes BC Owner

*Retail Value Assumptions

Lease Rate NNN $50.00 psf per year

Monthly Parking Revenue (net of costs) $0 per month

Vacancy and Non Recoverable Allowance 5.00%


Capitalized Value per 1000 SF Gross

Rental Rev $468,750

Parking $0

Total $468,750

Vacancy $23,438

NOI $445,313

Capitalized Value $11,132,813

Value psf of net leasable space $1,187.50 psf


PAGE 92


Analysis

Revenue

Strata Sales Revenue $64,706,250

Market Rental Revenue $0

Below Market Rental Revenue $0

Social Housing Units Revenue $0

Gross Retail Value $11,132,813

Gross Office Value $0

Total Gross Value $75,839,063

Less Commissions on Strata $1,941,188

Less Commissions on Rental $0

Less Commissions on Commercial $222,656

Net Sales Revenue/Value $73,675,219

Project Costs



Allowance for Demolition of Existing Buildings $163,460



On and Off-Site Servicing $160,061

Density Bonus Contribution $483,386

Rezoning Costs $0

Hard Construction Costs $27,392,500

Site Landscaping $0

Public Art Contribution $0

Soft costs and Professional Fees $2,255,953

Development management $913,661


Contingency on hard and soft costs $1,568,451

Marketing on Strata Units $1,294,125

Initial Lease Up Costs on Market Rental Units $0

Initial Lease Up Costs on Below Market Rental Units $0

Initial Lease Up Costs on Social Rental Units $0

Leasing Commissions on Commercial Space $46,875

Tenant Improvement Allowance on Retail Space $0

Tenant Improvement Allowance on Office Space $0

GVS & DD Sewer Levy - Strata Apartment $61,104

GVS & DD Sewer Levy - Rental Residential $0

GVS & DD Sewer Levy - Commercial $8,719

TransLink - Strata Apartment Residential $68,400

TransLink - Rental Residential $0

TransLink - Commercial $11,719

Market Strata Apartment DCLs $1,483,650

Market Rental DCLs $0

Below Market Rental DCLs $0

Social Housing DCLs $0

Retail DCLs $193,500

Office DCLs $0

School Site Acquisition Charge $0

Less property tax allowance during approvals/development $210,390

Less School Tax Surcharge During Development $283,688

Interim financing on construction costs $1,361,848

Financing fees/costs $355,889

Less Net GST (assuming builder holds units) $0

Total Project Costs Before Land $38,317,378 which works out to $619 psf of gross floor area

Developer's Profit $9,889,414

Residual to Land and Land Carry $25,468,427

Less financing on land during construction and approvals $1,416,681

Less financing fee on land loan $135,291

Less property closing costs $1,061,532

Residual Land Value $22,854,923

Residual Value per sq.ft. of site $1,219

Residual Value per sq.ft. of FSR $406

Residual Value per sq.ft. of gross buildable floorspace $369


PAGE 93

Attachment 1c


Attachment 1c


Estimated Residual Land Value based on Rezoning to Mixed-Use Concrete at 6.0 FSR (strata) (rezoning only; no rapid transit premium)











Storage 0.22 39.8 sf per unit





Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Market Rental 0 85% 0 616 0 0.6 0


Social Housing 0 85% 0 706 0 0.5 0

Retail 9,375 100% 9,375 n/a n/a 14


Total 116,682 100,586 105 130

Revenue/Value















Rezoning Costs $500,000

Construction Costs



















Government Levies















PAGE 94

Attachment 1c – continued


Financing
























Tax Rate 0.2% between $3.0-$4.0 million, and0.4% over $4.0 million



*Assumes BC Owner







Rental Rev $468,750

Parking $0

Total $468,750

Vacancy $23,438

NOI $445,313




PAGE 95


Analysis

Revenue












Project Costs







Density Bonus Contribution $0



Site Landscaping $0

Public Art Contribution $231,030


Development management $1,708,085





















Office DCLs $0


















PAGE 96

Attachment 1d


Attachment 1d


Estimated Residual Land Value based on Rezoning to Mixed-Use Concrete at 6.0 FSR (strata) (rezoning only; with rapid transit premium)
















Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Market Rental 0 85% 0 616 0 0.6 0


Social Housing 0 85% 0 706 0 0.5 0

Retail 9,375 100% 9,375 n/a n/a 14


Total 116,682 100,586 105 130

Revenue/Value
















Construction Costs



















Government Levies















PAGE 97

Attachment 1d – continued


Financing



























*Assumes BC Owner







Rental Rev $468,750

Parking $0

Total $468,750

Vacancy $23,438

NOI $445,313




PAGE 98


Analysis

Revenue












Project Costs










Site Landscaping $0
























Office DCLs $0


















PAGE 99

Attachment 2a


Attachment 2a


Estimated Residual Land Value based on Rezoning to Mixed-Use Concrete at 6.0 FSR (market rental) (rezoning only; no rapid transit premium)


Site Size 18,750 sq.ft.









Storage 6% of residential FSR 39.9 sf per unit





Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls

Strata Residential 0 85% 0 #DIV/0! 0 1.1 0

Market Rental 108,797 85% 92,477 616 150 0.6 90


Social Housing 0 85% 0 706 0 0.5 0

Retail 9,375 100% 9,375 n/a n/a 14


Total 118,172 101,852 150 104

Revenue/Value

Strata Residential $0 per net square foot















Construction Costs



















Government Levies















PAGE 100

Attachment 2a – continued


Financing



























*Assumes BC Owner

*Market Rental Capitalized Value Assumptions

Rent Assumptions Rent

Unit Type # Units Size rent/month

Studios 25 25% 435 1,768$

1-Bedroom 40 40% 545 2,056$

2-Bedroom 25 25% 775 2,703$

3-Bedroom 10 10% 950 3,559$

Total 100 100%

Average 616 2,296$

3.73$

Revenue and Operating Cost Assumptions

Rental Rate Per Month $3.73 psf per month or

$2,296 per unit per month

Monthly Parking Revenue $100 per month

Storage Revenue $40 per month on 75% of units


Operating costs for New Rental Units $4,801 per unit per year

Property Tax Allowance

Residential Assessment (upon completion of new building) $80,917,676 (see capitalized value below)

Residential Tax Rate 0.247%

Residential Property Taxes $199,726

Capitalization Rate for Rental Apartment Space 4.00%

Capitalized Value

Rental Rev $4,132,890

Parking $108,000

Storage $54,000

Total $4,294,890

Vacancy $85,898

Net $4,208,992

Op Costs $720,135

Taxes $199,726

NOI $3,289,131


psf of rentable space $889.17

**Retail Value Assumptions






Rental Rev $468,750

Parking $0

Total $468,750

Vacancy $23,438

NOI $445,313




PAGE 101

Attachment 2a – continued

Analysis

Revenue

Strata Sales Revenue $0

Market Rental Revenue $82,228,283






Less Commissions on Strata $0




Project Costs










Site Landscaping $0






Marketing on Strata Units $0

Initial Lease Up Costs on Market Rental Units $525,000






GVS & DD Sewer Levy - Strata Apartment $0

GVS & DD Sewer Levy - Rental Residential $160,800


TransLink - Strata Apartment Residential $0

TransLink - Rental Residential $180,000


Market Strata Apartment DCLs $0

Market Rental DCLs $1,097,760




Office DCLs $0






Less Net GST (assuming builder holds units) $4,111,414




Less financing on land during construction and approvals $825,335


Less property closing costs $587,333


Residual Value per sq.ft. of site $712




PAGE 102

Attachment 2b


Attachment 2b


Estimated Residual Land Value based on Rezoning to Mixed-Use Concrete at 6.0 FSR (market rental) (rezoning only; with rapid transit premium)











Storage 6% of residential FSR 39.9 sf per unit





Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf Parking Stalls

Strata Residential 0 85% 0 #DIV/0! 0 1.1 0

Market Rental 108,797 85% 92,477 616 150 0.6 90


Social Housing 0 85% 0 706 0 0.5 0

Retail 9,375 100% 9,375 n/a n/a 14


Total 118,172 101,852 150 104

Revenue/Value
















Construction Costs



















Government Levies















PAGE 103



Financing



























*Assumes BC Owner

*Market Rental Capitalized Value Assumptions

Rent Assumptions Rent

Unit Type # Units Size rent/month

Studios 25 25% 435 1,856$

1-Bedroom 40 40% 545 2,159$

2-Bedroom 25 25% 775 2,838$

3-Bedroom 10 10% 950 3,737$

Total 100 100%

Average 616 2,411$

3.92$

Revenue and Operating Cost Assumptions

Rental Rate Per Month $3.92 psf per month or

$2,411 per unit per month

Monthly Parking Revenue $100 per month

Storage Revenue $40 per month on 75% of units


Operating costs for New Rental Units $4,801 per unit per year

Property Tax Allowance

Residential Assessment (upon completion of new building) $80,917,676 (see capitalized value below)

Residential Tax Rate 0.247%

Residential Property Taxes $199,726

Capitalization Rate for Rental Apartment Space 4.00%

Capitalized Value

Rental Rev $4,339,535

Parking $108,000

Storage $54,000

Total $4,501,535

Vacancy $90,031

Net $4,411,504

Op Costs $720,135

Taxes $199,726

NOI $3,491,643


psf of rentable space $943.92

**Retail Value Assumptions






Rental Rev $468,750

Parking $0

Total $468,750

Vacancy $23,438

NOI $445,313




PAGE 104


Analysis

Revenue

Strata Sales Revenue $0

Market Rental Revenue $87,291,074






Less Commissions on Strata $0




Project Costs










Site Landscaping $0






Marketing on Strata Units $0

Initial Lease Up Costs on Market Rental Units $525,000






GVS & DD Sewer Levy - Strata Apartment $0

GVS & DD Sewer Levy - Rental Residential $160,800


TransLink - Strata Apartment Residential $0

TransLink - Rental Residential $180,000


Market Strata Apartment DCLs $0

Market Rental DCLs $3,074,600




Office DCLs $0






Less Net GST (assuming builder holds units) $4,364,554












PAGE 105

Attachment 3a

Attachment 3a

Case Study #3: Site in Burquitlam


Major AssumptionsSite and Building Size


Assumed Density 0.35 FSR




Revenue and Value



Vacancy and Non Recoverables 5.0%


Value of Office Space $0.00

Value of Retail and Service Space $632 per sq.ft. of leasable area




Total Estimated Value $9,777,000


PAGE 106

Attachment 3b


Attachment 3b


Estimated Residual Land Value based on Existing C-2 Zoning at 1.05 FSR (strata mixed use, wood-frame)
















Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Retail 12,246 100% 12,246 n/a n/a 20

Office 12,246 95% 11,633 n/a n/a 20

Total 48,983 44,697 26 69

Revenue/Value


Retail* $700 per net square foot including parking revenue (see separate calculations)

Office** $600 per net square foot including parking revenue (see separate calculations)








Density Bonus Contribution 1 $3 psf of bonus density


Rezoning Costs $0 excluded from analysis

Construction Costs
















Government Levies





Market Strata Apartment DCCs $17.00 per sq.ft. of floorspace

Retail DCCs $7.15 per sq.ft. of floorspace

Office DCCs $7.15 per sq.ft. of floorspace



PAGE 107



Financing





















*Assumes BC Owner






Rental Rev $428,597

Vacancy $21,430

NOI $407,167


Value psf of net leasable space $700.00 psf

**Office Value Assumptions





Rental Rev $349,000

Vacancy $17,450

NOI $331,550




PAGE 108


Analysis

Revenue



Gross Office Value $6,980,006


Less Commissions on Strata $450,908



Project Costs







Density Bonus Contribution $73,474

Rezoning Costs $0


Site Landscaping $0





Contingency on hard and soft costs $923,775

Marketing on Strata Units $300,606








Market Strata Apartment DCCs $416,382

Retail DCCs $87,599

Office DCCs $87,599




Interim financing on construction costs $486,993














PAGE 109

Attachment 3c


Attachment 3c


Estimated Residual Land Value based on Rezoning to C-7 Transit Village at 4.5 FSR (strata) (rezoning only; no rapid transit premium)
















Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Retail 11,663 100% 11,663 n/a n/a 19


Total 209,925 180,186 210 250

Revenue/Value














Construction Costs
















Government Levies










PAGE 110



Financing




















*Assumes BC Owner






Rental Rev $408,188

Vacancy $20,409

NOI $387,778




PAGE 111


Analysis

Revenue








Project Costs










Site Landscaping $0















Market Strata Apartment DCCs $3,370,710

Retail DCCs $83,428

Office DCCs $0





Financing fees/costs $1,017,703













PAGE 112

Attachment 3d


Attachment 3d


Estimated Residual Land Value based on Rezoning to C-7 Transit Village at 4.5 FSR (strata) (rezoning only; with rapid transit premium)
















Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Retail 11,663 100% 11,663 n/a n/a 19


Total 209,925 180,186 210 250

Revenue/Value














Construction Costs
















Government Levies










PAGE 113



Financing




















*Assumes BC Owner






Rental Rev $408,188

Vacancy $20,409

NOI $387,778




PAGE 114


Analysis

Revenue








Project Costs










Site Landscaping $0
















Retail DCCs $83,428

Office DCCs $0


















PAGE 115

Attachment 4a

Attachment 4a

Case Study #4: Site in Fleetwood


Major Assumptions

Site and Building Size

Site Size 37,034 sq.ft. or 521 by 71

Assumed Density 0.194 FAR



Retail 7,200 sq.ft. with 100% rentable

Revenue and Value




Value of Office Space Upon Lease-up $0.00

Value of Retail and Service Space Upon Lease-up $450 per sq.ft. of leasable area

Vacancy and non recoverables 5.00%






PAGE 116

Attachment 4b


Attachment 4b


Estimated Residual Land Value based on Existing CHI Zoning at 1.0 FSR (retail plus limited office uses)

Assumptions

Site and Building Size Assumptions:

Assumed Site Size 37,034 or 0.85 acre

FAR 1.00

Project Size 37,034

Retail Area 11,110 sq. ft.

Office Area 25,924 sq. ft.

Rentable Area (Retail) 11,110 sq. ft. or 100% of gross area

Rentable Area (Office) 23,331 sq. ft. or 90% of gross area

Common Area (Shared) 7,407 sq. ft. or 20% of gross area

Parking (Retail) 3 stall per 100 square metres of gross area

Parking (Office) 1.4 stall per 100 square metres of gross area

Total Stalls 61

Underground/structured Parking Stalls 0

Surface Parking Stalls 61

Revenue and Value Assumptions:

Average Net Lease Rate (Retail) $30.00 per sq.ft. of rentable area

Average Net Lease Rate (Office) $27.50 per sq.ft. of rentable area

Operating Costs (Retail) $15.00 per sq.ft. of rentable area

Operating Costs (Office) $10.00 per sq.ft. of rentable area

Annual Vacancy Allowance 2.0%

Property Management 0.0% of lease revenue (included in operating costs)

Structural Allowance 0.0% of lease revenue

Assumed Net Parking Revenue $75 per stall per month


Profit Allowance 13.0% of value or 15.0% of costs

Cost Assumptions:

Demolition Allowance $72,000

Site Servicing (sidewalks, landscaping, etc) $555,415

Allowance for piling, stabilization $0 per gross sq.ft.

Building Construction Costs (to base building retail) $250 per sq.ft.

Building Construction Costs (to base building office) $250 per sq.ft.

Parking Construction Costs $0 per stall (assuming underground)

Parking Construction Costs $7,500 per stall (assuming at grade)

Base Building Hard Construction Costs $262 per sq.ft. buildable (including parking)

Allowance to Finish Common Areas $50 per sq.ft. of common area

Fit-up Allowance Retail $25 per rentable square foot

Fit-up Allowance Office $50 per rentable square foot

Soft Costs (including project management) 12% of hard costs

Contingency 5.0% of hard and soft costs

City-Wide DCC $10.92 per sq. ft. floorspace

City-Centre DCC $0.00 per sq. ft. floorspace

Metro Vancouver DCC $2.67 per sq. ft. of floorspace

Interim Financing 5.0% on 50% of all costs assuming a 1.00 year construction period

Share of Construction Costs Financed 75.0%

Share of Land Costs Financed 75.0%

Property Taxes During Development 1.02% applied to land value in Year 1 $4,119,200

applied to 50% of gross value of building in Year 2, which is: $9,926,276

Upfront Leasing Commissions 17% of Year 1 revenue

Marketing $50,000

Lease-up period after construction complete 6 months, or 0.5 years

Assumed up-front vacancy cost during lease-up $42.50 per sq.ft. (i.e. lease revenue+operating costs) on 25% of space during lease-up

Sales Commission 2%


PAGE 117


Analysis

Revenue

Lease Revenue $955,422

Recovered Operating Costs $417,373

Parking Income $19,800

Total Gross Revenue $1,392,595

Less Operating Costs $399,967

Less Management $0

Less Structural $0

Net Operating Income $992,628


Less Commission $397,051

Net Proceeds $19,455,502

Total Value per sq.ft. buildable $525

Costs


Site Servicing $555,415

Allowance for piling, stabilization $0

Hard Construction (including parking) $9,702,908

Allowance to Finish Common Areas $370,340

Fit-up Allowance Retail $277,755

Fit-up Allowance Office $1,166,571

Upfront Leasing Commissions $162,422

Marketing $50,000

Upfront Vacancy Cost during Lease-up $196,743

Soft Costs (including project management) $1,164,349

Contingency $543,363

City-Wide DCC $404,411

City-Centre DCC $0

Metro Vancouver DCC $98,881

Property Taxes during Development $63,097

Interim Financing $278,030

Total Costs Before Land and Profit $15,106,284 which works out to $408 per sq.ft. buildable


Residual to Land and Land Carry

Land Residual Before Holding Costs $1,760,445

Less interim financing on land $89,123

Less property transfer tax $1,566

Residual Land Value $1,669,756 or $1,963,994 per acre





PAGE 118

Attachment 4c


Attachment 4c


Estimated Residual Land Value based on Rezoning to 4.0 FSR (strata) (rezoning only; no rapid transit premium)



Gross Parcel Size 37,034 sq.ft. 0.85 acre

Dedications 0 sq.ft.


Site Frontage 521 ft

Base Density 2.5 FAR

Bonus Density 1.5 FAR

Exclusions 0.0 FAR

Total Density 4.0 FAR

Total Gross floorspace 148,136 sq.ft.

Gross residential floorspace 137,026 sq.ft.

Gross commercial floorspace 11,110 sq.ft.


Net Saleable


Number of

Units

Parking Stalls

per Unit or

1075 sf

Parking

Stalls

Strata Residential 125,916 83.0% 104,510 800 131 1.5 197

Rental 0 85% 0 565 0 1.5 0

Retail 11,110 100% 11,110 n/a n/a 3.00 31

Office 0 95% 0 n/a n/a 0.0 0

Total 137,026 115,620 131 228

Revenue/Value


Rental $0 per net square foot (see separate calculations)









Standard Site Servicing $555,415 $3,500 per lineal metre of frontage

Amenity Contributions on Base Density

Community Amenity Contribution Residential $1,458 per unit on average

Affordable Housing Contribution $1,000 per strata unit

Public Art Contribution (Allowance) $1.95 psf of gross building

Undergrounding Utilities $0.00 psf of gross building

Community Amenity Contribution Non-Residential $0.00 psf of site area

Amenity Contributions on Bonus Density

Community Amenity Contribution Residential $0 per unit on average

Affordable Housing Contribution $0 per strata unit





Construction Costs



Rental Residential Area $0 per gross sq.ft. of rental residential area




Overall Costs Per Square Foot $380.01 per gross sq.ft.




Site Landscaping $185,170 or $10 psf of site area on 50% of site

Electrical Charging Station $0 - stations $0 per station

Other $0






PAGE 119



Government Levies


GVS & DD Sewer Levy - Townhouse $0 per townhouse unit




TransLink - Townhouse $0 per market unit




Market Townhouse DCCs $0.00 per sq.ft. of floorspace

Rental Residential DCCs $21.38 per sq.ft. of floorspace




Financing









Initial Lease Up Costs on Rental Units $2,000 per unit





Net GST on Rental Units 3.20% of capitalized value of rental units









*Assumes BC Owner






Rental Rev $35,000

Vacancy $1,750

NOI $33,250

Capitalized Value $665,000

Value psf of net leasable space $665 psf


PAGE 120


Analysis

Revenue


Rental Value $0








Project Costs






Standard Site Servicing $555,415

Electrical Charging Station $0


Community Amenity Contribution Residential $119,371

Affordable Housing Contribution $81,875

Public Art Contribution (Allowance) $180,546

Undergrounding Utilities $0

Community Amenity Contribution Non-Residential $0


Community Amenity Contribution Residential $0

Affordable Housing Contribution $0

Public Art Contribution (Allowance) $0





Site Landscaping $185,170


Other $0






Initial Lease Up Costs on Rental Units $0


Tenant Improvement Allowance on Retail Space $277,755



GVS & DD Sewer Levy - Townhouse $0




TransLink - Townhouse $0




Market Townhouse DCCs $0

Rental Residential DCCs $0

Retail DCCs $121,323

Office DCCs $0

School Site Acquisition Charge $78,600






Total Project Costs Before Land $72,012,606 which works out to $486 per sq.ft.


Residual to Land and Land Carry $951,859



Less property closing costs -$33,783

Residual Land Value $890,985





PAGE 121

Attachment 4d


Attachment 4d


Estimated Residual Land Value based on Rezoning to 4.0 FSR (strata) (rezoning only; with rapid transit premium)









Exclusions 0.0 FAR






Net Saleable


Number of

Units

Parking Stalls

per Unit or

1075 sf

Parking

Stalls


Rental 0 85% 0 565 0 1.5 0

Retail 11,110 100% 11,110 n/a n/a 3.00 31

Office 0 95% 0 n/a n/a 0.0 0

Total 137,026 115,620 131 228

Revenue/Value



Retail $686 per net square foot including parking revenue (see separate calculations)






















Construction Costs







Overall Costs Per Square Foot $380.01 per gross sq.ft.






Other $0






PAGE 122



Financing























*Assumes BC Owner






Rental Rev $35,000

Vacancy $1,750

NOI $33,250




PAGE 123


Analysis

Revenue


Rental Value $0








Project Costs
























Other $0






















Office DCCs $0







Total Project Costs Before Land $72,120,523 which works out to $487 per sq.ft.











PAGE 124

Attachment 5a

Attachment 5a

Case Study #5: Site in Lynn Creek

Estimated Existing Value based on Existing Single Family Lot Values

Existing Use Existing

Zoning Total Size

Estimated

Value Per Sq.

Ft.

Total Estimated ValueAssembly

Premium Total Value

SFD RS4 12,400 140$ 1,740,000$ 20% 2,088,000$

SFD RS4 7,480 180$ 1,350,000$ 20% 1,620,000$

SFD RS4 7,060 180$ 1,270,000$ 20% 1,524,000$

SFD RS4 4,200 260$ 1,090,000$ 20% 1,308,000$

31,140 5,450,000$ 6,540,000$


PAGE 125

Attachment 5b


Attachment 5b

Case Study #5: Site in Lynn Creek Town Centre

Estimated Residual Land Value based on Rezoning to 2.5 FSR OCP Density (strata) (rezoning only; no rapid transit premium)



Site size 31,146 sq.ft. or 0.72 acre

Base Density - Existing Zoning 0.45 FSR (Deemed Density)

Bonus Density to OCP 2.05 FSR

FSR Exclusions 0.00 FSR (lock off units, amenity space, etc)

Total Density 2.50 FSR



Gross commercial floorspace 0 sq.ft.


Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Retail 0 100% 0 n/a n/a 1.9 0

Office 0 95% 0 n/a n/a 1.9 0

Total 77,865 66,185 2,683 83 100

Revenue/Value

Strata Residential (woodframe) $800 per net square foot






Allowance for Demolition of Existing Buildings $0



Site Servicing $289,291 or $2,500 per lineal metre of frontage

Density Bonus Contribution $0.00 psf of bonus density from base to OCP

Rezoning Costs $200,000 excluded from analysis

Construction Costs





Cost Per Underground Parking Stall $55,000 per underground/structured parking stall





Landscaping $311,460 or $20 psf of site area on 50% of site

Other $0





Government Levies

GVRD Sewer Levy - Strata Residential $1,416 per market unit

GVRD Sewer Levy - Commercial $1.20 per sq.ft. of commercial space

TransLink - Strata Residential $1,200 per market unit


Market Strata Residential DCCs $14.38 per sq.ft. of floorspace



School Site Acquisition Charge $0.00 per unit


PAGE 126



Financing



Financing fees 1.0%










Additional School Tax 0.4000% of assessed value over $4 million + 0.2% between $3 and $4 million

Assumed current assessment (Year 1 of analysis) $0




PAGE 127


Analysis

Revenue


Gross Retail Value $0




Less Commissions on Commercial $0


Project Costs










Landscaping $311,460

Other $0






Leasing Commissions on Commercial Space $0



GVRD Sewer Levy - Strata Residential $117,528

GVRD Sewer Levy - Commercial $0

TransLink - Strata Residential $99,600

TransLink - Commercial $0

Market Strata Residential DCCs $1,119,445

Retail DCCs $0

Office DCCs $0



Less school tax allowance during approvals/development $47,922




Total Project Costs Before Land $32,571,593





Less property purchase tax $459,304






PAGE 128

Attachment 5c


Attachment 5c

Case Study #5: Site in Lynn Creek Town Centre

Estimated Residual Land Value based on Rezoning to 2.5 FSR OCP Density (strata) (rezoning only; with Bus Rapid Transit premium)



Site size 31,146 sq.ft. or 0.72 acre

Base Density - Existing Zoning 0.45 FSR (Deemed Density)

Bonus Density to OCP 2.05 FSR

FSR Exclusions 0.00 FSR (lock off units, amenity space, etc)




Gross commercial floorspace 0 sq.ft.


Net Saleable


Number of

Units

Parking Stalls

per Unit or

1000 sf

Parking

Stalls


Retail 0 100% 0 n/a n/a 1.9 0

Office 0 95% 0 n/a n/a 1.9 0

Total 77,865 66,185 2,683 83 100

Revenue/Value

Strata Residential (woodframe) $808 per net square foot









Site Servicing $289,291 or $2,500 per lineal metre of frontage

Density Bonus Contribution $0.00 psf of bonus density from base to OCP

Rezoning Costs $200,000 excluded from analysis

Construction Costs





Cost Per Underground Parking Stall $55,000 per underground/structured parking stall





Landscaping $311,460 or $20 psf of site area on 50% of site

Other $0





Government Levies

GVRD Sewer Levy - Strata Residential $1,416 per market unit

GVRD Sewer Levy - Commercial $1.20 per sq.ft. of commercial space

TransLink - Strata Residential $1,200 per market unit


Market Strata Residential DCCs $14.38 per sq.ft. of floorspace



School Site Acquisition Charge $0.00 per unit


PAGE 129



Financing



Financing fees 1.0%










Additional School Tax 0.4000% of assessed value over $4 million + 0.2% between $3 and $4 million

Assumed current assessment (Year 1 of analysis) $0




PAGE 130


Analysis

Revenue


Gross Retail Value $0




Less Commissions on Commercial $0


Project Costs










Landscaping $311,460

Other $0






Leasing Commissions on Commercial Space $0



GVRD Sewer Levy - Strata Residential $117,528

GVRD Sewer Levy - Commercial $0

TransLink - Strata Residential $99,600

TransLink - Commercial $0

Market Strata Residential DCCs $1,119,445

Retail DCCs $0

Office DCCs $0



Less school tax allowance during approvals/development $48,717




Total Project Costs Before Land $32,589,486





Less property purchase tax $478,470






PAGE 131

Attachment 6a

Attachment 6a

Case Study #6: Site in Broadway Corridor


Major Assumptions


Site Size 17,550 sq.ft. or 150 by 117

Assumed Density 0.00 FSR


Office 9,310 sq.ft. with 100% rentable


Revenue and Value



Capitalization Rate for Office 4.50%

Capitalization Rate for Retail 4.00%

Value of Office Space Upon Lease-up $556

Value of Retail and Service Space Upon Lease-up $1,000 per sq.ft. of leasable area

Vacancy and non recoverables 5%


Capitalized Value of Office Space $4,913,611



Plus Rental Units $3,300,000 $550,000 per unit and 6 units

Estimated Value $13,910,761

Acquisition Premium 10%



PAGE 132

Attachment 6b


Attachment 6b

Case Study #6: Site in Broadway Corridor Uptown Office Precinct Estimated Residual Land Value based on Existing C-3A Zoning (commercial) (3.3 FSR)

Assumes developer builds, leases, and then sells and expects a 15% profit margin on total costs

Assumptions



FSR 3.00 FSR

Heritage Density Transfer 0.30 FSR


Project Size 57,915 sq. ft.

Gross Office Area 51,773 sq. ft. 2.95 FSR

Gross Retail 6,143 sq. ft. 0.35 FSR

Parking 108 1 per 50m2

Total Stalls 108



Strata Office Share 0% of gross site area

Leasehold Office Share 100% of gross site area

Saleable Strata Office 0 sq. ft. or 95% of gross area and 0 parking stalls

Leasable Leasehold Office 49,184 sq. ft. or 95% of gross area and 104 parking stalls

Rentable Area (Retail) 5,835 sq. ft. or 95% of gross area 4 parking stalls

108 total parking stalls

Revenue and Value Assumptions: 43,044 square feet

Average Strata Sales Price (Office) $1,100 per sq.ft. of saleable area 2.5 storeys

Average Net Lease Rate (Office) $37.00 per sq.ft. of rentable area assuming landlord provides fit up allowance

Average Net Lease Rate (Retail) $50.00 per sq.ft. of rentable area assuming landlord provides fit up allowance






Assumed Net Parking Revenue $150.00 per stall per month

Cap Rate 4.25%


Pre-Construction Costs

Heritage Density $85.00 psf

Cost Assumptions:

Demolition Allowance $335,900 $20 per square foot of existing building area

Site Servicing (sidewalks, landscaping, etc) $274,390 $3,000 per metre of frontage




Parking Construction Costs $55,000 per stall (assuming underground)



Allowance to finish common areas $50 per sq.ft. of common area

Fit-up Allowance Office Strata $0 per saleable square foot

Fit-up Allowance Office Leasehold $50 per rentable square foot




City of Vancouver DCL $20.64 per sq. ft. of floorspace

Layered DCL $0.00 per sq. ft. of floorspace

Metro Vancouver DCL $0.930 per sq. ft. of floorspace




Financing Fee 1.5%




Marketing $173,745 $3.00 per square foot



Sales Commission 2.0%


PAGE 133


AnalysisStrata Revenue $0

Lease Revenue $2,005,994

Recovered Operating Costs $990,347



Less Operating Costs $990,347

Net Operating Income $2,192,607

Capitalized Value of Leasehold Space $51,590,746

Value of Strata Space $0

Total Value $51,590,746

Less Commission $1,031,815



Heritage Density $447,525





Allowance to finish common areas $144,788

Fit-Up of Strata Space $0

Fit-Up of Leasehold Space $2,605,078

Upfront Leasing Commissions $702,098

Marketing $173,745

Upfront Vacancy Cost during Lease-up $676,278


Contingency $937,094

City of Vancouver DCL $1,195,366

Layered DCL $0

Metro Vancouver DCL $53,861


Interim Financing $1,139,826


Total Costs Before Land and Profit $36,280,990

Total Costs per sq.ft. buildable $626

Profit: $6,727,433

Land Residual:



Less property taxes during approvals $121,397







PAGE 134

Attachment 6c


Attachment 6c


Estimated Residual Land Value based on Rezoning to 6.0 FSR (commercial) (no transit premium)


Assumptions



Base Density 3.00 FSR

Additional Density 3.00 FSR






Total Stalls 196










Average Strata Sales Price (Office) $1,100 per sq.ft. of saleable area 4 storeys









Cap Rate 4.25%



Rezoning Allowance $200,000

Rezoning Fee $47,300

Cost Assumptions:


















Commercial Linkage Fee $0.00 per sq. ft. of additional density




Financing Fee 1.5%









PAGE 135




Recovered Operating Costs $1,800,630



Less Operating Costs $1,800,630







Heritage Density $0








Upfront Leasing Commissions $1,255,904

Marketing $315,900

Upfront Vacancy Cost during Lease-up $1,295,245


Contingency $1,741,952


Layered DCL $0


Commercial Linkage Fee $0





Total Costs per sq.ft. buildable

Profit: $12,068,565

Land Residual:







PAGE 136

Attachment 6d


Attachment 6d


Estimated Residual Land Value based on Rezoning to 6.0 FSR (commercial) (with transit premium)


Assumptions



Base Density 3.00 FSR

Additional Density 3.00 FSR






Total Stalls 196










Average Strata Sales Price (Office) $1,100 per sq.ft. of saleable area 4 storeys









Cap Rate 4.25%




Rezoning Fee $47,300

Cost Assumptions:


















Commercial Linkage Fee $0.00 per sq. ft. of additional density




Financing Fee 1.5%









PAGE 137














Heritage Density $0









Marketing $315,900





Layered DCL $0


Commercial Linkage Fee $0





Profit: $13,084,494

Land Residual:


Less interim financing on land $1,060,887




Value per sq.ft. of site area $964

Value per sq.ft. of FSR $161

Value per sq.ft. buildable $161


PAGE 138

Attachment 7a

Attachment 7a



Major Assumptions


Site Size 86,986 sq.ft. or 290 by n/a

Assumed Density 0.18 FAR




Revenue and Value



Capitalization Rate for Office 5.00%

Capitalization Rate for Retail 5.00%

Value of Office Space Upon Lease-up $0

Value of Retail and Service Space Upon Lease-up $650 per sq.ft. of leasable area

Vacancy and non recoverables 5%





Acquisition Premium 10%



PAGE 139

Attachment 7b


Attachment 7b


Estimated Residual Land Value based on Rezoning to 3.5 FSR (mixed use strata above retail) (no transit premium)









Exclusions 0.0 FAR






Net Saleable


Number of

Units

Parking Stalls

per Unit or

1075 sf

Parking

Stalls


Rental 0 85% 0 565 0 1.0 0

Retail 26,096 100% 26,096 n/a n/a 3.00 73

Office 0 95% 0 n/a n/a 0.0 0

Total 278,355 235,471 262 335

Revenue/Value

























Construction Costs













Other $0






PAGE 140



Government Levies


GVS & DD Sewer Levy - Townhouse $0 per townhouse unit




TransLink - Townhouse $0 per market unit




Market Townhouse DCCs $0.00 per sq.ft. of floorspace

Rental Residential DCCs $15.88 per sq.ft. of floorspace




Financing























*Assumes BC Owner






Rental Rev $45,000

Vacancy $2,250

NOI $42,750




PAGE 141


Analysis

Revenue


Rental Value $0








Project Costs












Undergrounding Utilities $544,967

Community Amenity Contribution Non-Residential $2,954











Other $0






















Office DCCs $0







Total Project Costs Before Land $144,850,220 which works out to $476 per square foot








Residual Value per sq.ft. of FAR $40



PAGE 142

Attachment 7c


Attachment 7c

Case Study #7: Site in Surrey City Centre Estimated Residual Land Value based on Rezoning to 3.5 FSR (commercial) (no transit premium)


Assumptions



FAR 3.50 FAR

Density Bonus 0.00 FAR

Density with Bonuses 3.50 FAR


Gross Office Area 274,006 sq. ft. 3.15 FAR

Gross Retail 30,445 sq. ft. 0.35 FAR


Total Stalls 398










Average Strata Sales Price (Office) $0 per sq.ft. of saleable area 1.8 storeys









Cap Rate 4.75%


Cost Assumptions:
















City of Surrey DCC Ground Floor (includes CC additional rates) $13.71 per sq. ft. of floorspace

City of Surrey Upper Floor (includes CC additional rates) $9.11 per sq. ft. of floorspace





Financing Fee 1.5%









PAGE 143
























Marketing $913,353




City of Surrey DCC Ground Floor (includes CC additional rates) $417,402

City of Surrey Upper Floor (includes CC additional rates) $2,496,194


Property Taxes during Development $1,378,607




Profit: $24,207,208

Land Residual:

Land Residual Before Holding Costs -$5,641,210

Less interim financing on land -$349,050


Less property closing costs -$331,319

Residual Land Value -$5,057,739

Value per sq.ft. buildable -$17

Value per sq.ft. of site area -$58


PAGE 144

Attachment 7d


Attachment 7d

Case Study #7: Site in Surrey City Centre Estimated Residual Land Value based on Rezoning to 3.5 FSR (commercial) (with transit premium)


Assumptions



FAR 3.50 FAR

Density Bonus 0.00 FAR

Density with Bonuses 3.50 FAR


Gross Office Area 274,006 sq. ft. 3.15 FAR

Gross Retail 30,445 sq. ft. 0.35 FAR


Total Stalls 398










Average Strata Sales Price (Office) $0 per sq.ft. of saleable area 1.8 storeys









Cap Rate 4.75%


Cost Assumptions:
















City of Surrey DCC Ground Floor (includes CC additional rates) $13.71 per sq. ft. of floorspace

City of Surrey Upper Floor (includes CC additional rates) $9.11 per sq. ft. of floorspace





Financing Fee 1.5%









PAGE 145
























Marketing $913,353




City of Surrey DCC Ground Floor (includes CC additional rates) $417,402

City of Surrey Upper Floor (includes CC additional rates) $2,496,194


Property Taxes during Development $1,481,612




Profit: $26,311,727

Land Residual:






Value per sq.ft. buildable $22

Value per sq.ft. of site area $76

date: june 5, 2020 subject: land value capture policy study

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